As we approach the threshold of 2024, the housing market landscape is marked by a dynamic interplay of factors, from soaring home prices to fluctuating mortgage rates and a persistent inventory crunch. Delving into the insights provided by experts and data from Bankrate.com, let's unravel the mysteries that the real estate market holds for the upcoming year.
1. Mortgage Rates: Navigating the Peaks
The specter of high mortgage rates looms large over the housing market, with an average 30-year mortgage rate of 7.69 percent recorded in early November. This marks a decline from the previous year but still hovers around 20-year highs. The Federal Reserve's war on inflation has been a key driver of these rate hikes, with the potential for a "new normal" of higher rates in 2024.
Key Points:
Rates doubled in 2022 due to the Fed's anti-inflation measures.
Greg McBride, CFA, anticipates that higher rates are here to stay unless a sharp economic slowdown occurs.
The possibility of lower rates hinges on the resolution of the Fed's war on inflation.
2. Home Sales: The Ebb and Flow
While home prices have stood firm, the volume of home sales experienced a notable dip in 2023. Existing-home sales in September saw a 15.4 percent year-over-year decline, amounting to an annual pace of 3.96 million. However, experts foresee a potential reversal of this trend in 2024 if mortgage rates take a dip.
Key Insights:
Lawrence Yun of NAR predicts a potential 15 percent rise in home sales in 2024.
Chen Zhao from Redfin suggests a moderate increase in sales due to rates likely remaining above 6 percent.
Selma Hepp emphasizes that lower mortgage rates could drive increased sales activity.
3. Housing Inventory: The Elusive Supply
Housing supply has been a persistent challenge in 2023, with existing homes on the market declining by 8.1 percent since the previous year. As of September, the market holds a mere 3.4-month supply, well below the 5 to 6 months considered balanced.
Key Considerations:
Low housing inventory has been a prevailing issue throughout 2023.
Selma Hepp, chief economist at CoreLogic, predicts that declines in mortgage rates could encourage more sellers to trade existing homes, adding inventory to the market.
Greg McBride also warns that the significant shortage of inventory suggests a buyer's market is unlikely in the short term.
4. Home Prices: The Unyielding Ascent
Home prices have reached historic highs, with September 2023's median of $394,300 only a modest $20,000 short of the record set in June 2022. Despite speculation about the potential for prices to drop in 2024, experts remain skeptical.
Key Observations:
Lawrence Yun, NAR (National Association of REALTORS®) chief economist, predicts a rise of around 3 to 4 percent in home prices.
Chen Zhao, who leads the economics team at Redfin, notes that sellers may be reluctant to give up low-interest rates, contributing to constrained inventory.
The likelihood of prices falling on a year-over-year basis is contingent on demand faltering.
5. Buyer's or Seller's Market: Balancing Act
The current market conditions favor sellers due to tight inventory, resulting in heightened competition among buyers. Despite hopes for a shift in the market dynamics, experts are cautious about a quick transformation.
Expert Perspectives:
Hepp also suggests that a buyer's market is unlikely without a significant uptick in inventory.
Zhao also expects demand to exceed supply, maintaining a seller's market.
McBride also anticipates a more balanced market in 2024, with sellers potentially making concessions.
As we peer into the 2024 housing market, the complexities of high mortgage rates, soaring home prices, and low inventory levels present challenges for both buyers and sellers. The key to success in this intricate landscape is informed decision-making. If you find yourself craving more insights or need personalized guidance tailored to your unique situation, Vision Realty & Management is here to help. Our team of experts is ready to assist you in understanding and navigating the predictions for the 2024 housing market. For a comprehensive discussion about your real estate needs and to gain valuable insights into the upcoming year, call us at 678-390-5727. At Vision Realty & Management, we're not just guiding you through properties; we're helping you navigate the future of your home.
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