by Karen Williams-deCastro- Broker Associate®, C2EX, RSPS, GRI, SRS, ABR, SFR, AHWD, CELA, CREN
For the average home buyer, the current real estate landscape presents a unique window of opportunity. As the market adjusts to changing dynamics, those aspiring to own a home can position themselves strategically to make the most of favorable conditions. Here's your guide to navigating the non-luxury housing market in 2024, supported by credible sources.
1. Market Shifts and Your Advantage
In the past year, a slowdown in home sales has marked the real estate trajectory due to escalating interest rates and record-high home prices. However, there's a glimmer of hope on the horizon. The Federal Reserve's recent decision to cease interest rate hikes and a potential 0.75% cut in the coming year hint at the possibility of lower mortgage rates. This translates to an advantageous time for home buyers, creating an environment where affordability and choice can thrive.
2. Stability in Non-Luxury Home Prices
Contrary to expectations, even with an 8% mortgage rate, home prices in 2023 did not experience a crash. On average, U.S. property values ended the year higher. The reason behind this resilience lies in the nationwide housing shortage, maintaining a delicate balance between demand and supply. While forecasts vary, experts agree that mortgage rates will be the primary influencer of property values. The potential for a slight decline or modest growth is on the horizon, making it an opportune moment for non-luxury buyers.
3. Stability in Luxury Home Prices
Contrary to expectations, even an 8% mortgage rate failed to shatter home prices in 2023. U.S. property values ended higher on average, a testament to the persistent imbalance between low demand and low supply. Housing experts forecast that this equilibrium will continue, holding up home prices in 2024. While some predict a slight decline, others anticipate modest growth. The consensus remains: mortgage rates will be the key driver, potentially propelling home prices higher if rates fall faster than expected.
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 me for recommendations and to find out what your home could sell for in today’s market.
4. Mortgage Rate Trends: A Buyer's Boon
The most promising news for 2024 is the expected decline in extra-high mortgage rates that have weighed on the real estate market. As the Federal Reserve signals a more favorable outlook, analysts predict a parallel drop in mortgage rates. While the era of ultra-low 3% rates may be over, the prospect of rates closer to 6% by the end of 2024 opens a window for prospective home buyers to lock in more affordable monthly payments and secure attractive deals.
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.
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 me 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.
5. Revival of Buyer Activity
Higher mortgage rates in recent years dampened home buyer demand, resulting in a substantial slowdown in the real estate sector. With the anticipated decrease in financing costs, sales volume is expected to rise. Lower mortgage rates could prompt hesitant sellers to list their homes, injecting much-needed inventory into the market. If you've been contemplating a home purchase, consider making a move before competition intensifies, as a surge in buyers is expected with declining mortgage rates.
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.
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.”
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.
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 me 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.
6. Navigating the Supply Challenge
While some predict an increase in listings as sellers grow impatient, others foresee a potential drop in inventory. The persistent shortage of new construction further complicates the situation. Despite these challenges, a real estate professional with local market expertise can help buyers explore off-market and pre-market listings, providing a competitive edge. Sellers, too, can benefit by preparing their properties to stand out in a low-inventory environment.
​​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.
Your Guide in the Home Buying Journey
While national forecasts offer a broad outlook, the intricacies of the Florida Keys housing market are best understood by local experts. If you're considering buying a home in 2024, our team is here to guide you through the market's twists and turns. Schedule a free consultation to develop a personalized action plan to achieve your homeownership goals.
Opinion for informational purposes only. Not intended as financial, legal, or tax advice. Consult appropriate professionals for individual needs.
Sources:
