Housing market predictions: Should I buy a house now or wait until 2023?

Woman thinking about the housing market


Despite negative housing market predictions following the Covid-19 pandemic, the Long Island real estate market experienced a housing boom as home inventory plunged and high demand soared. Now two years later, as we navigate through the halfway mark of 2022, we’re seeing rising inflation and interest rate hikes, yet Long Island continues to see increases in home prices.

So are we hitting the peak of this extreme seller’s market and are we on the cusp of another 2008 crash? Here is everything you should consider when asking yourself should I buy a house now or wait until 2023?

What is the real estate market like in 2022?

The good news is, market experts do not expect a repeat of 2008—TRID guidelines put into place after the Great Recession have worked to ensure borrowers are much more qualified to maintain a mortgage. Even six months after the two-year foreclosure moratorium was lifted, there are still very few short sales and foreclosures on the market than expected.

If we look more closely at the hyper local Long Island housing market, we are seeing a shift as we enter the second half of 2022, though.

Prices stabilizing

The National Association of Realtors (NAR) chief economist Lawrence Yun predicts that with mortgage interest rates rising and increased inventory, monthly price growth will slow in the upcoming months. Home prices are still expected to rise 4% to 7%, but that is a far more healthy market than the 10% to 20% increases we were seeing in 2020 up until early 2022.

We’re already seeing more supply of homes for sale on Long Island, fulfilling the demand of more buyers, and stabilizing home price appreciation to healthier numbers.

Reduced buyer competition

As mortgage rates rise along with rising home prices, we will see some buyers unable to afford current home prices, unfortunately pushing them out of the real estate market. This in turn, will reduce buyer competition and offer some much needed relief for frustrated buyers as they no longer have to bid arbitrary offers above the asking price.

We are also seeing a reduction in the amount of investors competing with home buyers. Over the past two years there have been a large amount of house flippers and prospective investors flooding the housing market because of the extremely low borrowing costs. Rising mortgage rates are not only pushing buyers out of the market, but investors, as well.

Reduced competition allows buyers to make fewer rash decisions when making such a big purchase. The days of frenzied bidding wars and extreme buyer competition may be over, but we still expect home values to increase. It’ll just be at a slower pace.

Why buying in 2022 is the better option

Uncertainty in the housing markets is scary, especially when making one of the most important financial decisions of your life. This fear leads to buyers and sellers worrying more about timing the market than about time in the market.

The real estate market is very nuanced, so it’s never really a “good” or “bad” time to buy— it really depends on your situation. We could argue that the past year was a bad time for buyers to buy houses because of low inventory and high demand, but it was also a great time to buy because mortgage interest rates were at record lows. But buyers who “overpaid” in a bidding war at the height of the seller’s market, have already built equity, their home values have increased, and they have a fantastic interest rate for the next 15-30 years. 

The earlier you buy a home, the more time you have to build equity and allow your home to appreciate within your lifetime. Though you may feel like waiting until the perfect time to buy is the most sound financial decision, waiting is not free— you may still have to pay rent while waiting out the unexpected.

Lower interest rates

Mortgage rates as of June 2022 are between 5-6%, a big difference from the 3-4% rates we were seeing earlier this year, but considering these numbers over the last 40 years, they are actually still historically low interest rates. And there is no sign from the federal reserve that rates will decrease any time soon.

But even if mortgage rates were projected to decrease in late 2023, housing prices are also projected to increase by 6.6% this year, making it still more expensive to wait to buy. And if in the future interest rates plummet, you can always refinance your mortgage to a lower rate.

High rent prices

When was the last time you heard of a rent decrease? Landlords are property owners, too. And when there is home price growth or economic growth, rents also increase. In fact, rent prices have gone up almost just as much as home prices. Following the global pandemic, rents have significantly risen across the United States by 14% to $1,877 (this number is higher on Long Island) a month in December 2021.

If you continue renting instead of buying a home, you not only miss out on building equity, but you’re still paying high prices towards someone else’s mortgage and equity. Just one year of rent could cover your closing costs or a big chunk of a down payment.

Payment stability

Though rent increases can happen every single year, your monthly mortgage payment will be constant for 30 years regardless of market conditions. Aside from a few short dips, the general trend since 1960 is that average home prices have and will continue rising until the end of time, as will rent prices.

And if you choose to pay just a little extra towards your principal each year, you could save money on interest, build equity faster, and pay off your mortgage earlier so you can live mortgage and rent-free.

How to prepare to buy a house now

While buying a house now is ideal based on current real estate market trends and forecasts, the main determining factor should come from whether you are ready for the homeowner’s lifestyle.

Assess your budget

Speak with a mortgage loan officer to see if your credit score, debts, assets, and income are in good shape for borrowing. Find out how much you can afford and how much you need to save for a down payment, closing costs, and other incidentals you’ll need to pay during the real estate transaction.

You’ll also want to know how much your monthly mortgage payments will be for different price points. In addition, be sure to consider extra monthly payments, such as utility bills and HOA fees, if required.

Consider your lifestyle

Buying real estate is an investment, with the biggest gains coming from long-term ownership. If you don’t plan on owning the property for at least a few years, and don’t have the flexibility to wait out unexpected dips in the housing market (like we saw in March – June 2020), then maybe owning a home isn’t the best fit for you.

You also want to consider if you are prepared for the responsibility of regular home maintenance and fixing big and small ticket items throughout the house. If maintaining your yard and the mechanics within the house isn’t your strong suit, luckily there are landscaping and home maintenance services available, but you’ll have to consider the additional costs of those services.

Find the right timing for you

People’s life events are the biggest motivators in the real estate market. The housing boom didn’t force sellers to sell and buyers to buy. In fact, we had supply constraints because homeowners weren’t selling.

A pandemic, the necessity to work from home, and an entire millennial generation who had pushed aside homeownership for higher education and careers were finally ready to buy their dream homes are what fueled buyer demand over the past two years. This doesn’t even include job changes, families growing or downsizing, and the many other “normal” reasons homes are bought and sold.

Consider what life events you are currently experiencing and which ones are you expecting in the future. Do you need to move into a specific neighborhood before the start of the school year to ensure your child’s enrollment? Or would you like to reduce your commute now that people are going back to the office? Look at what is motivating you to purchase a home and decide when the best time to buy is for you.

Can I still wait until 2023?

Of course! It’s your choice to make. But don’t make your decision based on unsubstantiated fears of what might happen, but rather consider what is projected to happen. Waiting may not get you a better deal. If you are financially stable and ready to become a homeowner now, there really is no reason to wait. Though it’ll be at a slower rate, the median home price and the average rate for mortgages are still expected to rise.

Bottom Line

This year’s housing market landscape makes it an ideal time to secure the lowest mortgage rates in the foreseeable future as more housing inventory, less buyer competition, and fewer bidding wars give buyers more negotiating power. In addition, housing market experts believe that the pandemic dealt irreversible pricing damage, making existing home prices the new baseline.


Cristina Morizio

Long Island real estate agent Cristina Morizo
As an experienced REALTOR® and Long Island native, I know the ins and outs of the real estate market. I help home buyers, sellers, investors and homeowners navigate and negotiate. Questions? Ready to buy or sell? Let’s talk!

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