A growing share of home buyers and sellers sat on the sidelines last year as the pace of home sales continued its downward trajectory.1 In fact, since the Federal Reserve began its series of interest rate hikes in 2022, the combination of higher borrowing costs and record-high home prices has fostered the steepest real estate market slowdown since the 2008 recession.2
Priced out of the market, a generation of would-be buyers has been forced to delay their plans for homeownership.3 At the same time, current owners—reluctant to give up their pandemic-era mortgage rates—are waiting to sell, which has resulted in a sharp drop in listings.4
But there may be some relief in sight: In December, the Fed signaled that it was done raising interest rates—and suggested that it could cut rates by 0.75% over the coming year. While mortgages don’t directly follow the federal funds rate, they typically move in tandem—so cheaper home loans may finally be on the horizon.5
Lower mortgage rates should bring some much-needed movement back into the real estate sector. But with a market this fluid, the home buyers and sellers with an edge will be those who proactively leverage a real estate agent’s on-the-ground expertise and stay flexible so that they can quickly adapt to changes.
What does that mean for you? Read on to learn more about the current state of the U.S. housing market, the potential opportunities for buyers and sellers, and economists’ predictions for the year ahead.
HOME PRICES WILL REMAIN RELATIVELY STABLE
Not even 8% mortgage rates could bring home prices crashing down in 2023, as some prospective home buyers may have hoped. In fact, on average, U.S. property values ended the year higher—with declines in some areas of the country offset by appreciation in others.6
Prices typically fall when rising interest rates drive down demand. So what’s keeping home values high? Mike Simonsen at Altos Research points to a nationwide housing shortage: “Declining home prices probably require that supply-and-demand imbalance, and what we have is really a balance. There’s a balance between low demand and low supply.”7
Analysts expect that equilibrium to continue to prop up home prices in 2024, although the specific forecasts vary. For example, economists at Realtor.com predict that the median home price will fall slightly, by 1.7%, while those at Fannie Mae project modest price growth of 2.8%.6,8
However, experts widely agree: Mortgage rates will be the largest driver of property values. If rates fall faster than expected, more buyers will enter the market—which could send home prices soaring higher.
What does it mean for you? There’s no evidence that home prices are headed for a major decline. So if you’re ready and able to afford a home, this is a great time to test the waters. The best bargains are often found in a slower market, like the one we’re experiencing right now. Contact us to discuss your goals and budget. We can help you make an informed decision about the right time to buy.And if you’ve been waiting to sell your home, this could be your year. Price growth has slowed, so now is the time to maximize your equity gains while minimizing your competition. Contact us for recommendations and to find out what your home could sell for in today’s market.
📷
MORTGAGE RATES SHOULD FINALLY TREND DOWN
The best news we’ve got incoming for 2024? The extra-high mortgage rates that have weighed heavily on the real estate market may finally be headed south.
At its December meeting, the Fed signaled that the worst is likely behind us and that it expects to cut its overnight rate in 2024. Analysts predict that mortgage rates will fall in lockstep.5
“Given inflation continues to decelerate and the Federal Reserve Board’s current expectations that they will lower the federal funds target rate next year, we likely will see a gradual thawing of the housing market in the new year,” said Freddie Mac’s Chief Economist Sam Khater following the announcement.9
The average 30-year fixed mortgage rate has already declined from an October high of around 8%, and analysts at Fannie Mae, the Mortgage Bankers Association, and Realtor.com all forecast that rates will trend down this year, ending 2024 closer to 6%.7
However, it’s not all good news: It appears that the days of 3% mortgage rates are firmly behind us. “As long as the economy continues to motor along, the new normal of higher rates is here to stay,” explains Greg McBride, chief financial analyst for Bankrate.4 So, when it comes to a home loan, borrowers may need to adjust their expectations.
What does it mean for you? If you’re a prospective home buyer, declining mortgage rates could give you the opportunity to lock in a more affordable monthly payment. And if you purchase before the market reheats, you could secure an especially good deal. To find the lowest rate, it pays to compare lenders. Ask us to refer you to a mortgage broker who can help you shop around for the best option.Sellers also have reason to celebrate buyers’ lower interest rates: As the barriers to entry to the housing market decline, they could enjoy more or better offers. Reach out to discuss how we can help you maximize your home’s sales potential.
LOWER RATES WILL BRING SOME BUYERS AND SELLERS BACK TO THE MARKET
Over the past couple of years, higher mortgage rates have cooled home buyer demand. They’ve also delayed the plans of many home sellers, who have been reluctant to trade in their current mortgages for loans that are several points higher.
With so many market participants playing the waiting game, the real estate sector has slowed significantly. National Association of Realtors (NAR) Chief Economist Lawrence Yun estimates that the number of existing home sales fell by 18% last year following a 17% decline in 2022.10
However, as financing costs tick down, sales volume is expected to rise. “Lower mortgage rates would help spur home sales activity, which [is] expected to increase in 2024 compared to 2023,” explains Selma Hepp, chief economist at CoreLogic. “Declines in mortgage rates will drive more sellers to trade their existing home and help add much-needed inventory to the market, leading to more transactions.”4
There’s also evidence that the patience of holdout home buyers may be waning, despite higher borrowing costs. A recent survey by Bank of America found that the number who are willing to wait for prices or mortgage rates to decline before making a purchase fell from 85% to 62% in just six months.11
“When it comes down to it, if buying a home is your goal and within your budget, the best time to buy is when you’re ready financially and you can find a home that fits your needs,” Matt Vernon, head of consumer lending at Bank of America, advised in a recent release. “Even in the current interest rate environment, there are clear benefits to purchasing a home and beginning to build equity.”11
What does it mean for you? If you’ve been waiting to buy a home, you might want to consider purchasing before the competition picks up. Pent-up demand could bring a flood of buyers back into the market as mortgage rates decline. Contact us if you’re ready to begin your home search.If you’re hoping to sell this year, you may also want to act fast. An increase in listings will make it harder for your home to stand out. We can help you chart the best course to maximize your profits, starting with a professional assessment of your home’s current market value. Reach out to schedule a free consultation.
📷
THE HOUSING SUPPLY SHORTAGE WILL PERSIST
Will home buyers who are eager for options have more homes to choose from this year?
Yun thinks so. He believes sellers will soon grow weary of waiting to list. “Pent-up sellers cannot wait any longer. People will begin to say, ‘life goes on,’” the NAR economist speculated at a November conference. “Listings will steadily show up, and new home sales will continue to do well.”10
But not everyone agrees. Economists at Realtor.com forecast that inventory could drop by as much as 14% this year. The decline in existing homes for sale has been compounded by a persistent shortage of new construction, with single-family housing starts falling 10.3% in 2023 and 11.2% in 2022.6
Even so, newly-built homes are playing an increased role in easing the supply crunch, accounting for around one-third of all homes for sale in 2023—which was twice the historical average.12 But new construction alone isn’t expected to fill the inventory gap.
According to First American Financial Corporation’s Chief Economist Mark Fleming, the U.S. currently has a shortfall of around one million homes, and conditions won’t ease until individual owners re-enter the market. “Only when more homeowners decide to sell, and then buy again, will housing supply and the pace of sales return to anything resembling normal.”13
What does it mean for you? Inventory remains tight, but buyers can benefit from the search expertise of a real estate professional. We can tap our extensive network to access off-market and pre-market listings while helping you explore both new construction and existing homes in our area.While sellers will continue to benefit from the low-inventory environment, they should be prepared to compete against brand-new homes. We can help you prep your property for the market and highlight the features most likely to appeal to today’s buyers.
WE’RE HERE TO GUIDE YOU
While national real estate forecasts can give you a “big picture” outlook, real estate is local. And as local market experts, we know what’s most likely to impact sales and drive home values in your neighborhood. As a trusted partner in your real estate journey, we’ll keep our ears to the ground so that we can guide you through the market’s twists and turns.
If you’re considering buying or selling a home in 2024, contact us now to schedule a free consultation. Let’s work together and craft an action plan to meet your real estate goals.
The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.
Sources:
- CNN – https://www.cnn.com/2023/10/19/homes/existing-home-sales-september/index.html
- Goldman Sachs – https://www.gspublishing.com/content/research/en/reports/2023/10/23/2d814362-a656-4cb3-8586-bea8591188e3.html
- ABC News – https://abcnews.go.com/US/millennials-priced-homeownership-feeling-pressure/story?id=105032436
- Bankrate – https://www.bankrate.com/real-estate/housing-market-2024/
- CBS News – https://www.cbsnews.com/news/interest-rates-are-paused-heres-why-thats-good-news-for-homebuyers/
- Realtor.com – https://www.realtor.com/research/2024-national-housing-forecast
- NerdWallet – https://www.nerdwallet.com/article/mortgages/2024-homebuying-trends-property-line-november-2023
- Fast Company – https://www.fastcompany.com/90991612/home-price-2024-outlook-fannie-mae
- Freddie Mac – https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-drop-below-seven-percent
- National Association of Realtors – https://www.nar.realtor/newsroom/nar-chief-economist-lawrence-yun-forecasts-existing-home-sales-will-rise-by-15-percent-next-year
- Bank of America – https://newsroom.bankofamerica.com/content/newsroom/press-releases/2023/12/bofa-report-shows-fewer-prospective-homebuyers-willing-to-wait-f.html
- Marketplace – https://www.marketplace.org/2023/11/27/mortgage-rates-new-home-sales/
- First American – qhttps://blog.firstam.com/economics/whats-the-outlook-for-the-housing-market-in-2024
No matter if some one searches for his required thing, therefore he/she needs to
be available that in detail, so that thing is maintained over here.
Fantastic website you have here but I was curious if you knew of any discussion boards that cover the same topics talked
about here? I’d really like to be a part of community where I can get responses from other
experienced individuals that share the same interest. If you have any recommendations, please let
me know. Cheers!
Thanks on your marvelous posting! I truly enjoyed reading it, you could be a great author.I will be sure to
bookmark your blog and may come back someday.
I want to encourage that you continue your great posts, have
a nice day!
I am curious to find out what blog system you happen to be utilizing?
I’m having some small security problems with my latest site and I would like
to find something more risk-free. Do you have any solutions?
I loved as much as you’ll receive carried out right here.
The sketch is attractive, your authored material stylish.
nonetheless, you command get bought an shakiness over that you
wish be delivering the following. unwell unquestionably come more formerly again since exactly the same nearly a
lot often inside case you shield this increase.
My brother recommended I might like this web site.
He was entirely right. This post truly made my day. You can not imagine simply how much time
I had spent for this information! Thanks!
It’s a shame you don’t have a donate button! I’d definitely donate to this outstanding blog!
I guess for now i’ll settle for book-marking and adding your
RSS feed to my Google account. I look forward to new updates
and will talk about this site with my Facebook group.
Talk soon!
We are a group of volunteers and starting a new scheme in our community.
Your site provided us with valuable information to work
on. You’ve done an impressive job and our whole community will be grateful to you.
What’s up to all, how is everything, I think every one is
getting more from this site, and your views are nice for new viewers.
Great article! We will be linking to this particularly great
post on our website. Keep up the great writing.
It’s going to be end of mine day, however before
finish I am reading this great post to improve my experience.
Wow, wonderful weblog layout! How lengthy have you ever been running a blog for?
you made blogging look easy. The overall glance of your website is great, let alone the content material!
I’ll right away seize your rss feed as I can’t to find your email subscription hyperlink or newsletter service.
Do you have any? Please allow me know so that I could subscribe.
Thanks.
Hi there, this weekend is pleasant for me, as this moment
i am reading this fantastic informative piece of writing here at my home.
fantastic issues altogether, you simply won a brand new reader.
What would you recommend about your put up that you made some days in the past?
Any certain?
Oh my goodness! Incredible article dude! Thank you so much, However
I am experiencing difficulties with your RSS. I don’t understand why
I can’t subscribe to it. Is there anyone else having the same RSS issues?
Anyone that knows the solution can you kindly respond?
Thanx!!
Hello there! Quick question that’s completely
off topic. Do you know how to make your site mobile friendly?
My weblog looks weird when browsing from my iphone 4.
I’m trying to find a template or plugin that might be able to
fix this problem. If you have any recommendations, please share.
With thanks!
I am not sure where you’re getting your information, but great
topic. I needs to spend some time learning more or understanding
more. Thanks for excellent information I was looking for this info for my mission.
I was able to find good info from your content.
I blog often and I genuinely thank you for your content.
This great article has really peaked my interest. I am
going to bookmark your site and keep checking for new details
about once a week. I subscribed to your RSS feed too.
I like the valuable information you provide in your articles.
I will bookmark your weblog and check again here frequently.
I am quite certain I will learn many new stuff right here!
Best of luck for the next!
Heya i am for the first time here. I came across this board and
I find It really useful & it helped me out a lot. I hope to give something
back and aid others like you helped me.
I don’t know if it’s just me or if perhaps everyone else encountering issues with your blog.
It looks like some of the text within your posts are running off the screen. Can somebody else please comment and let me
know if this is happening to them as well? This may
be a issue with my web browser because I’ve had this happen before.
Thanks
Hey there I am so grateful I found your webpage, I really found you by accident, while I
was looking on Aol for something else, Anyhow I am here now and would just like to say
thanks a lot for a marvelous post and a all round enjoyable blog (I also love
the theme/design), I don’t have time to read through it all at the moment but I have
saved it and also added in your RSS feeds, so when I have time I
will be back to read a lot more, Please do keep up
the fantastic job.
Having read this I thought it was rather enlightening. I appreciate you finding the time and energy
to put this article together. I once again find myself personally spending a
significant amount of time both reading and commenting.
But so what, it was still worth it!
Hello there! This post couldn’t be written any better!
Reading through this post reminds me of my good old room mate!
He always kept talking about this. I will forward this post to him.
Fairly certain he will have a good read. Thank you for sharing!
Hello there! I know this is somewhat off topic but I
was wondering which blog platform are you using for this
site? I’m getting tired of WordPress because I’ve had
issues with hackers and I’m looking at options for another platform.
I would be awesome if you could point me in the direction of a good platform.
Hi there, yeah this article is actually good and I have learned lot of things from it regarding blogging.
thanks.
Hey there! I know this is somewhat off topic but I was wondering if you knew where I could locate a captcha
plugin for my comment form? I’m using the same blog platform as yours and I’m having problems finding one?
Thanks a lot!
Appreciating the time and effort you put into your website and detailed information you offer.
It’s great to come across a blog every once in a while that isn’t the
same unwanted rehashed information. Great read! I’ve bookmarked your site
and I’m including your RSS feeds to my Google account.
wonderful put up, very informative. I ponder why
the opposite experts of this sector don’t notice this.
You must proceed your writing. I’m sure, you’ve a huge readers’ base already!
Magnificent beat ! I would like to apprentice while you amend your
website, how can i subscribe for a blog website?
The account helped me a acceptable deal. I had been a little bit acquainted of
this your broadcast provided bright clear idea
This site was… how do you say it? Relevant!!
Finally I’ve found something that helped me. Appreciate it!
Outstanding story there. What happened after? Good luck!
I’m gone to convey my little brother, that he should also pay a visit
this blog on regular basis to obtain updated
from latest gossip.
This is the perfect web site for anybody who wants to understand this topic.
You understand so much its almost tough to argue with you (not that I actually will need to…HaHa).
You definitely put a brand new spin on a topic that has been discussed
for decades. Great stuff, just excellent!
Hi to all, how is the whole thing, I think every one is getting more from
this site, and your views are nice in favor of new users.
Paragraph writing is also a excitement, if you be acquainted with after that you can write otherwise it is difficult to write.
Hello, just wanted to mention, I liked this blog post.
It was helpful. Keep on posting!
What’s up, I read your blog on a regular basis.
Your writing style is witty, keep it up!
Thanks for sharing such a nice opinion, piece of writing is fastidious, thats why i have read
it completely
Hmm it seems like your blog ate my first comment (it was extremely long) so
I guess I’ll just sum it up what I submitted and say, I’m
thoroughly enjoying your blog. I as well am an aspiring blog writer
but I’m still new to the whole thing. Do you have any tips
and hints for rookie blog writers? I’d really appreciate it.
Spot on with this write-up, I honestly think this web site needs a lot more attention. I’ll probably be back again to read
more, thanks for the advice!
Hi there, There’s no doubt that your site may be having web browser compatibility problems.
Whenever I look at your site in Safari, it looks fine however when opening in IE, it’s got some overlapping issues.
I merely wanted to provide you with a quick heads up!
Aside from that, great website!
Hi there! I just wanted to ask if you ever have any issues
with hackers? My last blog (wordpress) was hacked and
I ended up losing many months of hard work due
to no data backup. Do you have any solutions to stop hackers?
Truly when someone doesn’t understand then its up to other users that
they will help, so here it occurs.
Every weekend i used to pay a visit this website, because i wish for enjoyment, since this this website conations genuinely good funny information too.
What’s up i am kavin, its my first occasion to commenting anyplace, when i read this
article i thought i could also make comment due to this brilliant paragraph.
Howdy, i read your blog from time to time and i own a similar
one and i was just wondering if you get a lot of spam feedback?
If so how do you reduce it, any plugin or anything you can advise?
I get so much lately it’s driving me crazy so any assistance is very much appreciated.
Keep this going please, great job!
I all the time used to study post in news papers but now as I am
a user of web therefore from now I am using net for posts, thanks to web.
What’s up, I want to subscribe for this weblog to get
hottest updates, therefore where can i do it please assist.
You are so awesome! I don’t believe I’ve truly read something
like this before. So nice to discover someone with genuine thoughts on this issue.
Seriously.. many thanks for starting this up.
This website is one thing that’s needed on the web,
someone with a little originality!
Hello, I desire to subscribe for this weblog to obtain newest updates, so where
can i do it please assist.
What’s up friends, nice paragraph and good arguments commented at this place, I am genuinely enjoying by these.
We are a group of volunteers and opening a new scheme in our community.
Your site provided us with valuable information to work on. You have done an impressive job and our whole
community will be grateful to you.
Hello, I enjoy reading through your article.
I wanted to write a little comment to support you.
Aw, this was a very good post. Taking a few minutes and actual effort to make a top notch article… but what can I say…
I put things off a lot and never seem to get nearly anything done.
I’m really enjoying the design and layout of
your site. It’s a very easy on the eyes which makes it much more enjoyable for me to come here and visit more often. Did you hire out a developer to create your theme?
Outstanding work!
Genuinely when someone doesn’t know then its up to other people
that they will help, so here it occurs.