Housing Market Predictions for 2023 and What They Mean for Bozeman
As housing market forecasters continue to discuss a potential crash, many Bozeman homebuyers are waiting with bated breath in hopes that this is the year they will be able to purchase a home. With interest rates on the rise, who can blame them for wanting to wait for a market crash, or at the very least take a small dip in mortgage rates before purchasing a home? But it is important to remember that a crash might not happen, and even if it does, Bozeman could end up being somewhat immune due to a continuing trend of higher demand than supply. Taking into consideration current market facts, let’s dive into how they might potentially change in the coming year.
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One of the few positives of the current inflation situation is that home prices seem to be plateauing. While it isn’t the big crash a lot of hopeful buyers were waiting for, a plateau in pricing could shift the Bozeman market enough to give buyers more of an advantage. Despite the lack of substantive changes in pricing in the last six months or so, homes are sitting on the market longer than they were in 2020 and 2021. As Nora Shelly wrote for the Bozeman Daily Chronicle, “Bozeman is part of a national trend as higher interest rates have impacted real estate across the country. But in a market where the median price of a single-family home went from $459,000 in July of 2019 to $745,000 in July 2022, any sign of a slowdown is notable.”Bozeman itself is still seeing an increase in housing demands as more and more people relocate to the area, but with prices seeming to hold steady in recent months, that could mean that the demand may have finally stopped pushing prices higher.
Those wanting to hold out for a big crash may find themselves coming up empty-handed. Unlike with the 2008 market crash, there is not currently a surplus of homes for sale. According to Robin Rothstein’s article for Forbes Advisor, “Housing supply that remains near historic lows has held up demand compared to other downturns, consequently sustaining higher home prices.”While it may seem like there is no end to the number of new constructions going up in Bozeman, the reality is that unless there is a significant decrease in demand, pricing is likely to hold steady. Shelly quoted the board president of the Gallatin Association of Realtors, Joanna Harper, as saying, “’ We’re still low inventory which…that would suggest that we wouldn’t see a rapid deterioration of prices, because we would need more supply than there is demand on a significant level.’” Those looking to settle in Bozeman long-term may need to reconsider waiting to get into a home, especially if they have the funds to do so.
The last major factor scaring off potential buyers is the high mortgage rates. With mortgage rates up to 6.48% as of January 5, it’s not a reach to say that those rates are likely to be what is scaring potential buyers the most right now. CNN Business reports that there may be signs that mortgage rates are finally dropping, “Mortgage rates rose throughout 2022, spurred by the Federal Reserve’s unprecedented campaign of harsh interest rate hikes to tame soaring inflation. But mortgage rates dropped in November and December, following data that showed inflation may have finally reached its peak.” Though it is far from a guarantee, it seems possible that lower rates could be on the horizon for 2023. It is difficult to say how much rates could drop, but even a gradual downward trend would be promising for buyers, as they would have the option to refinance down the road.
The bottom line with timing for purchasing a home is that it almost always pays off to buy when you can instead of waiting for things to get better. Considering that home prices have been on the rise for decades, it is not realistic to expect a sustained market drop, especially within a growingmarket like Bozeman. “Instead of waiting for much lower prices, experts suggest buying a home based on your budget and needs. If you find a home you love in an area you love, and it also fits your budget, then chances are it might be right for you.” And with rental rates on the rise, there is a chance that rental rates will exceed your potential monthly mortgage payment, even with high-interest rates. All in all, this year might not be the worst year to buy a home in Bozeman, or anywhere else, as it may seem at first glance.
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Sources
Bahney, Anna. “Mortgage rates start 2023 twice as high as they were a year ago” CNN, CNN Business, 5 Jan. 2023, https://www.cnn.com/2023/01/05/homes/mortgage-rates-january-5/index.html
Rothstein, Robin. “Housing Market Predictions for 2023: Will Home Prices Drop?” Forbes, Forbes Magazine, 21 Dec. 2022, https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions/.
Shelly, Nora. “'The Faucet Has Shut off': Bozeman Area Housing Market Sees Signs of Cooling, but Prices Remain High.” Bozeman Daily Chronicle, 3 Sept. 2022, https://www.bozemandailychronicle.com/news/city/the-faucet-has-shut-off-bozeman-area-housing-market-sees-signs-of-cooling-but-prices/article_62de17ac-2ad7-11ed-8c9d-c35c506f71cb.html.