Ok, So I thought it might be fun to take a look at some of the predictions I made last January and see how accurate they were. Keep in mind I got all of this information from other people because I don’t like to try to predict things.
“Interest Rates-The mortgage interest rate for last year was a tough battle for many reaching 7.9% in October, but the downward trend we saw starting in November and continuing through December is going to keep moving in that direction. This is good news for buyers and sellers. Sellers will be able to list higher without pricing potential buyers out and buyers will have more options since the cost of borrowing will be more attainable. There is a lot of debate as to whether it will reach 5% again and no one seems to agree on that point, but the good news is that regardless of whether it drops back down that far or not there are other factors that will affect the market.”
So, rates did continue to come down. It did take them a while to get moving though. We did see some rates in the 5% ranges back in September, but since then the rates have gone back into the 6’s and have been staying steadily there since. Rates in the 6s were good for real estate this summer with a lot of movement happening from May-August, so hopefully we continue to see positive trends in the market as we see rates in the 6s again now.
“Investments -With such low inventory and a large number of unlivable homes, now is the time as investors to think about some house flipping. Back in 2023 NAR estimated 320,000 homes valued under $250,000 is what is needed to meet the number of home buyers in the low- and middle-income areas. Find properties that you can flip at that price and make a profit and buyers will find you. There has also been a rise in family renters but not as much of a rise in larger apartments or single family home properties for rent. So if you're looking for a developing market to jump in on this may be one to look in to.”
The market for lower priced homes has been pretty wide open to investors. The demand for these homes has all but washed away in recent years and instead we have seen a rise in demand for luxury homes. Investors were and still are able to snag a good deal on a lower priced fixer upper and either flip it into a luxury home they can sell or fix it up to mid range and rent it out. If investments in real estate are what you are looking to dive into, this is a good time to start.
“Incentives-An election year means that politicians are going to be looking for ways to help boost this market as well so we will probably see a lot of government programs, and political incentives put in place to help both buyers and sellers. Assistance on downpayments, special first-time homebuyer loans, and discounts, newly lowered taxes, more and higher housing vouchers, and reducing regulations that limit development are all examples of some of the things to be on the lookout for during the campaign season.”
We heard about some incentives that president elect Donald Trump talked about during his campaign. He mentioned that he does have a housing market plan to build more homes and lower mortgage rates, but you know how I don’t like to predict, so next year we will see what actually happens when it does.
“Home Prices- New construction homes will also continue to curb the uptick of price in existing homes, but low inventory keeps that from going too low. Unlike 2008, there are many homeowners today that are locked in at 5% or lower and own more equity in their home than what they owe, so those people are not going to sell. Also, because of the higher amount of younger people unable to buy, we are going to have an increase of the older generation staying put while the younger generation moves in increasing the number of multigenerational households and even more homes staying off the market. New construction has been on the rise already since last year because of their ability to sell at a lower price point than existing homes, and this will continue to keep prices low, but do not expect them to stay low forever. Although they will rise slowly and we may only start to see these effects towards the end of the year, they will begin to rise as more people buy.”
Well for most of the year we saw housing prices rise pretty steadily both in rentals and in purchases. Then in September and again in October I started to notice a decrease in prices. Chester County has always operated a little differently than some f our surrounding markets, so we are a bit on our own in this as well as other markets have not seen the decrease quite like we have here, but it did start to happen.
“Industry Changes-In case you don't follow real estate news I will fill you in just a bit on what happened in 2023 and has bled into 2024. If you follow this blog at all you will have heard me talk about rights that buyers and sellers have from their REALTORS®. Unfortunately there were some Brokerages, and Agents who thought they could get around some of the disclosers their clients were intitled to, and there are many clients who are only just now realizing that they were even entitled to these rights and feel taken advantage of. This has led to lawsuits and appeals and larger suits and an ill feeling towards using the services of REALTORS®. When I listen to the description of REALTORS® by those who felt taken advantage of, its giving sleazy car salesman. Because of this distrust there will be many people who try to go the buying or selling process alone or with the help of an online service. Many of those who do will unfortunately fall victim to bad deals due to the lack of knowledge of the behind the scenes work that REALTORS® do for their clients, however these brave forgers will help weed out the agents who are cutting corners and are only in it to make money regardless of who they hurt.”
Yepp, it happened. The Lawsuit finalized and we have a whole new set of documents we need to have buyers and sellers fill out, and new stricter policies that we need to follow. All in all though not much changed for PA realtors. If you want to dive into this topic more you can read about it in my New NAR Policies and Contracts Part 1 and Part 2.
“Wrap up-All of this adds up to the fact that we can expect to see home sales go up in 2024. Although the biggest obstacle will continue be low inventory. If you think 2024 is going to be the year for you, then let's chat now because the spring market is just around the corner, and that's when the real action will begin.”
Inventory has been our biggest issue all year. You know rates started moving, and prices started moving, but inventory is still super low. In my November newsletter I mentioned how I thought I might be seeing some additional inventory, and yes there is slightly more than there had been. If you look at the numbers though its like 5-7 more homes, which is still movement in the right direction, but still not enough to make a real difference in the grand scheme of things.
I feel like a lot of what we thought was going to happen did and the ones that didn’t were actually for the better. Stay tuned next week for a look at the 2025 Market predictions.
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