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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.
In this week’s episode, we continue our series about managing your money in 2023 with a conversation about home buying and selling.
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To get a sense of what 2023 might hold for potential home buyers and sellers, it’s helpful to reflect on what the housing market was like in 1981. Much like today, high mortgage interest rates and limited inventory deterred people from buying and listing homes.
But we overcame the housing crisis of the ’80s, and there are signs that some of our current challenges are easing. The Federal Reserve has hinted more rate hikes are coming in 2023 — but at a less aggressive pace than we saw in 2022. Although there is still a shortage of affordable housing, we could see lower mortgage rates this year.
Negotiating a rate buydown is a strategy buyers can use to lower their interest rate. A rate buydown reduces your mortgage payment by temporarily cutting the interest rate; the difference between the actual rate and the buydown rate is usually paid for by the seller.
A rate buydown benefits the seller, too, because it can help them move their home off the market. Getting the house move-in ready and pricing it reasonably may also shorten the time between listing and closing.
- Buying and selling are more challenging this year. More houses are on the market, but they’re taking longer to sell as higher interest rates cut into demand.
- Sellers, put in the work. To sell your house this year, make it move-in ready, price it reasonably and be patient because it may take longer to sell.
- Buyers, consider asking for a rate buydown. This can be a helpful way to strike a deal with a seller who doesn’t want to cut the price.
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