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What's Affecting Home Affordability in 2023?

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If you’ve been following the housing market over the last couple of years, you’ve likely heard about growing affordability challenges. But according to experts, the key factors that determine housing affordability are projected to improve this year. Selma Hepp, Executive, Deputy Chief Economist at CoreLogicshares:

". . . with slowly improving affordability and a more optimistic economic outlook than previously believed, the housing market could show resilience in 2023."


Let’s take a closer look at what’s impacting affordability and how you can make the smartest decision for you and your family.

Mortgage Rates

Mortgage rates shot up to over 7% last year, causing many buyers to put their plans on hold. But things are looking different today as rates are starting to come down. George Ratiu, Senior Economist at realtor.comexplains:

Let's celebrate some good news … mortgage rates are down. With inflation showing a tangible slowdown, I do expect mortgage rates to follow suit in the months ahead."


Even a small change in rates can impact your purchasing power. Nadia Evangelou, Director of Forecasting for the National Association of Realtors (NAR), gives this context:

"With a 6% rate instead of 7%, buyers pay about $2,700 less every year on their mortgage. As a result, owning a home becomes affordable to about 1.4 million more renters and 4.3 million more homeowners."


If 7% rates paused your home buying plans last year, this could be the opportunity you need to get back in the game.

Home Prices and Inventory

The second factor at play is home prices. Home prices have made headlines over the past few years because they skyrocketed during the pandemic. When discussing home prices in 2023, Lawrence Yun, Chief Economist at NAR, says:

"After a big boom over the past two years, there will essentially be no change nationally . . . Half of the country may experience small price gains, while the other half may see slight price declines."

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So, while prices will likely be flat this year in some markets, others could see small gains or slight declines. It all depends on your local area. Your Realtor will be able to help you with this. If you’re looking for a Realtor you can trust, your Churchill Home Loan Specialist can introduce you to one of their partners.

Regarding inventory, 2020 and 2021 made it difficult for buyers, especially first-time home buyers, to get an offer accepted. With multiple over asking price offers and bidding wars, the market was seller focused. In 2023, there has been a slight increase in available homes as well as new builds. In fact, the amount of time homes are staying on the market has increased as well, giving buyers a bit more time to decide what’s right for them!

The Current Economy

It’s no secret that the economy is in transition. As we face a potential recession and high inflation, many people are wondering how to maintain their finances while also moving forward with big decisions, such as purchasing a home. When you couple the current economy and worries of unemployment with a tight

The Fed is actively working to slow inflation, which is great for the economy, but takes time. Many home buyers are hoping to see an improvement in the economy before they invest in real estate. The truth is a home is still one of the safest investments people can make. Rates are still low by historical standards, and when renting you’re paying 100% interest. When you buy, you’ll be able to build equity and refinance to a lower rate when the economy allows for it.

So, What Do You Do Now?

While affordability does remain an issue for buyers in the current economy, the more neutral playing field makes it more than possible to purchase. Here are some tips for your home search:

1. Know your budget. Before you begin looking for a new home, or even speak with a Home Loan Specialist, sit down, go over your expenses and how much you want to spend (monthly and overall). It’s important to remember that what you qualify for and what you feel comfortable spending may be different numbers, and you need to choose what’s best for YOU.

2. Speak with a Churchill Home Loan Specialist. By speaking with one of our mortgage experts, you won’t just know what you qualify for, but you’ll be able to go over all your loan options. Your Home Loan Specialist will help you find the smartest mortgage plan for your short- and long-term goals and will partner with you to build lasting wealth through homeownership.

 You will also be able to go into your home search knowing your price point as well as your home loan plan, making it easier for you and your Realtor to find a home that fits your budget and needs.

3. Find programs that give you a competitive advantage, like Home Buyer Edge. This unique program encompasses the best that Churchill Mortgage has to offer and helps you get your offer accepted quickly! Here’s what you may have access to: 

A Lightning-Fast Pre-Approval: Start shopping as soon as the same day!

*Rate Secured: Cap your interest rate for up to 90 days while looking for your new home. If rates go up, yours won’t, but if rates go down, you’ll get the lower rate!

**Certified Home Buyer: This is the gold standard of pre-approvals and is the next best thing to a cash offer! You’ll have most of your underwriting done up front, making your offer more attractive to sellers.

***$5,000 Seller Guarantee: If your offer falls through due to financing, we’ll give the seller $5,000 in addition to the escrow money.

Affordability looks different for everyone, no matter the state of the economy. While there are certain factors that can impact overall affordability, it all comes down to doing what’s best for you. If you’re looking to buy in 2023, our team is here to guide you every step of the way!

*Rate Secured is available on 30-year conventional conforming and high-balance fixed-rate loans. Rate Secured is not available on investment property home loans.

**The Churchill Certified Home Buyer program is not a commitment to lend funds and is not an approval but is a conditional approval subject to your acceptance of the terms and the conditions being fully satisfied prior to closing. All conditions are subject to final underwriting and final investor approval. The certification is subject to the financial status and credit report(s) of everyone on the application remaining substantially the same until closing, an acceptable contract of sale on a suitable property, collateral (the appraisal, title, survey, condition, and insurance) satisfies the requirements of the lender and loan selected is still available in the market. All closing conditions of the lender must be satisfied including the clear transfer of the title, acceptable and adequate title and hazard insurance, flood certification, and any inspections that are required by the real estate contract.

***Seller Guarantee is for qualifying borrowers and select loan types only and are not available in all states or locations. Offer only valid on home loans closing on or before December 31st, 2023.



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