So I want to try a little something new with you all and share predictions about the market. Personally, I do not like to think myself able to predict the future, so these are not my thoughts or opinions, but just my interpretation of the thoughts of others on the market this upcoming year. I don't like to spend too much time reading into what could be because I feel my time could be better spent developing plans for any scenario, but that doesn't help those of you who may want to feel better prepared, so that is why I am sharing this, not because I think it will absolutely happen or because I think this should happen. That said, lets jump in and see what people are saying (side note-since these aren't my original thoughts, I will link articles I read so you can get the information right from the source if you want)
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.
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.
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.
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.
Renting will Lose its Stigma
I am going to get just a little opinionated here because seriously it's not that there is a negative stigma about renting. The reason people don't want to rent is twofold, starting with the fact that most monthly rent payments are the same if not more than mortgage payments, and that is amplified by the fact that even with a higher payment you now still own less because you were renting the entire time; not to mention the fact that those high rent payments make it even harder to save for a downpayment on a purchase. So what I am saying is, if you look down on someone because they are renting then you should probably do a little inner reflection work and learn to not harbor so much distain for others, but if you are upset about renting and want to own because there are real and tangible disadvantages to renting then stay upset, keep fighting for what you want, and when your ready I'll do everything in my power to help you make the switch as effortlessly as possible.
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.
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.
Links
Looking Ahead: Will the 2024 Housing Market Slowly Unfreeze? | U.S. News Housing Market Index | U.S. News (usnews.com)
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