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Everything First-time Home Buyers Need to Know in 2023

Kristen Campbell  |  January 30, 2023

If you’re thinking about investing in real estate, first-time homebuyers need to know these things about the market in 2023. 

Those of us who have never owned a home at least know one thing about real estate: Location, location, location. But these days, mortgage rates and home prices (not to mention inventory), are getting plenty of attention, too. With prices still so high, it’s hard to know whether a prospective home buyer should be looking to invest in a home now or later. “Trying to time the housing market is like trying to time the stock market,” says Danielle Hale, chief economist for “Even the experts have a hard time doing it.”

But here’s the thing: Whether or not you buy a house has less to do with the market and more to do with where you stand, financially, and what your goals are. For starters, it’s helpful to focus on why you’re considering such a significant purchase, and take a look at your budget, and all your numbers, including your debt. From there, you’ll have a better sense of whether you should keep looking for your dream home, or wait it out a bit longer. 

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Is there a right time to buy?

“For a lot of people, trying to find a home that fits their needs and is in their budget is going to be the most challenging part,” Hale says. “When you find a home that actually does fit what you’re looking for and falls within your budget, then that’s the time to go for it.”

But as with so many things, preparation is key. So if you’re in the market for a new home, take some time to think through a few things. 

Know yourself

It’s time to really consider your needs, including what you want from your home. Hale notes that if you’re renting, ready to commit to being in one place for a period of time and start building up equity as a homeowner, the considerations are going to be different than if you’re a long-time homeowner needing to downsize. Think about what you want as well as your budget parameters, and make decisions based on that, she advises.

Set your budget

As Hale notes, in order to stick to your budget, you have to set one. One of the best things you can do to get started is to check out a calculator that shows how much house you can actually afford. We like this one at Nerdwallet which lets you budget for insurance and property taxes, too. In addition to taking your debt into consideration, take a long look at your expenses, too, Hale says. “Everyone’s situation is going to be different,” she says. And your situation is going to change (perhaps even rapidly) depending on what stage of life you’re in. For example, someone with young children is probably going to spend more on child care or schooling. Someone starting a small business might have unforeseen start-up costs before they get off the ground. The list goes on, and all of these mean adjusting your budget accordingly. 

Another important part of your budgetary equation is that mortgage rates now are close to 6.5%, Hale says, adding that “that’s down from just over 7 percent, where they were just as recently as early November.” But she also notes that a year ago, they were just 3.22%. For a lot of home buyers she says, the combination of high home prices and mortgage rates might mean the difference between being able to buy this year versus having to put off that decision to save up and get better prepared to buy in the future.

That said, while Hale says these mortgage rates are historically high and probably a bit of a shock to expectations for younger households who haven’t seen rates this high before, she also notes that if you go back to, say, the 1990s or earlier, 6.5 percent would have actually been a very good rate.

Audrey J. Boissonou, a member of the National Association of Mortgage Brokers and Sales Leader at Guarantee Mortgage in San Francisco, cites the two percent rates of 2020 and 2021 as “an aberration.” She writes: “We have moderated down to historically good rates of 5% or 6% projections for early 2023. Buyers must determine what they can afford in terms of monthly payment and interest rates factor into that calculation along with job stability and overall income.”

Research, research, research

While there are some things related to a home purchase that only you know and can determine, there’s much that’s beyond your control. “Gather the best information that you can,” Hale says, noting that a lot of real estate data is available at (You can find their 2023 housing forecast here.)

Skylar Olsen, Zillow’s chief economist, suggests exploring further, to go find places you wouldn’t have considered before,  noting that you can lean into digital tools such as 3D home tours to help you do that. Too, she advises, “work with an expert that can help you navigate these housing markets because they are changing pretty quickly.” (You can find research from Zillow here, as well as its affordability calculator.)

Get some perspective

We entered the pandemic with a really healthy housing market, Olsen says. As mortgage rates dropped, sales exploded, harvesting existing inventory, she says, noting that in February of 2022, inventory was down 52 percent from a pre-pandemic, normal February. 

Starting the year at record lows for the number of homes available for sale created a really tough market for home buyers, according to Hale. Indeed, she notes that home prices rose really sharply, with price growth topping out at 18 percent in June.  These days, the story is changing. In December of 2022, Hale says, their data showed home price growth slowed to single digits – but it’s still at a “fairly high single-digit pace.” 


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