Where is the US Housing Market going in 2023?
In the past few years, we have seen some dramatic changes in the housing market largely due to the government stimulus during the Covid pandemic. First the government increased the money supply, handed out stimulus checks and lowered interest rates to keep the economy going. This helped in the short term as a lot of economic activity came to halt for a while. The stimulus and rates cuts fueled a boom in the housing market as increased affordability enabled more homebuyers to pay more for their homes. For most buyers it is all about the monthly mortgage payment, what you can qualify for and most importantly, what you can afford to pay.
Homeowners that refinanced in 2021 when mortgage interest rates were as low as 3%, benefited with lower monthly payments which put more money in their pocket, which is another form of stimulus as it added to consumer spending, or increased savings.
For move up buyers they benefitted from the increase in equity in their home when they sold, and rolled some of that equity into their next home. First time buyers that got in early also benefitted from a rapid increase in equity in a short period of time.
All this government stimulus got us through the pandemic, but also caused the highest rate of inflation we have seen in many years. People that already owned assets, such as a home…
