Real Estate Trends 2024: What Buyers and Sellers Should Know

Real Estate Trends 2024: What Buyers and Sellers Should Know

In the ever-changing landscape of real estate, staying informed about the latest trends and market predictions is crucial for both buyers and sellers. As we approach the year 2024, it's essential to understand what lies ahead in the real estate market and how it may impact your decisions.

In this comprehensive guide, we will delve into the key trends and insights that will shape the real estate market in 2024, offering valuable advice to help you make informed choices.

Housing Market Predictions for 2024

The real estate market has been subject to significant fluctuations, making it challenging for prospective buyers to gauge affordability. In 2023, soaring mortgage rates and skyrocketing median home prices created a daunting scenario for many aspiring homeowners. 

As Realtor Darren Robertson states, "In addition to inventory levels, mortgage originations play a crucial role in market dynamics. Eye-popping mortgage rates in recent years led to a decline in mortgage applications."

Mortgage rates surged, reaching a high of 7.79% in October, and median home prices exceeded $400,000 in the third quarter. The average monthly payments also hit a record high of $2,306 in July.

However, there is hope on the horizon for 2024. While home prices are expected to remain elevated in some markets, industry experts anticipate a softening of prices in certain regions. Economists also express optimism that the Federal Reserve's rate-hiking campaign to combat inflation may come to an end, which indirectly influences mortgage rates. Despite these positive signs, affordability challenges are likely to persist due to pent-up demand, low inventory, and the continuation of elevated mortgage rates.

Mark Fleming, the chief economist at First American Financial Corporation, predicts a "flat stretch" ahead for the housing market in 2024. He emphasizes that finding the right balance in the market will take time and that affordability issues may continue until the Federal Reserve implements rate cuts to the federal funds rate.

Factors Influencing the Housing Market Recovery

For a housing market recovery to occur, several conditions must align. One critical factor is the increase in inventories of homes for sale. Keith Gumbinger, the vice president of mortgage website HSH.com, emphasizes that higher inventory levels can ease upward pressure on home prices. However, he cautions against rapid reductions in interest rates, which could lead to a surge in demand and negate inventory gains, causing prices to rebound. Gradual rate reductions, on the other hand, can improve buyer opportunities over time.

In addition to inventory levels, mortgage originations play a crucial role in market dynamics. Eye-popping mortgage rates in recent years led to a decline in mortgage applications. Although application activity remains tepid, the Mortgage Bankers Association (MBA) anticipates an increase in total mortgage origination volume in 2024. Rates are expected to drift down to near 6% by the end of the year, contributing to this uptick.

Housing Inventory Forecast for 2024

Housing supply remains a significant challenge in the real estate market, especially at the entry level. Many homeowners are reluctant to sell due to low interest rates, contributing to the persistent demand-supply imbalance. Rick Sharga, founder and CEO of CJ Patrick Company, expects that a meaningful increase in existing homes for sale will only occur when mortgage rates return to the low 5% range, likely not until after 2024.

Despite these challenges, there are positive signs on the horizon. Home-builder sentiment is on the rise, driven by declining mortgage rates and improved building conditions. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) recently reported an increase in builder sentiment. Additionally, new single-family building permits have been on the rise, signaling potential growth in new construction homes.

Existing-home sales, though fluctuating, showed a slight thaw in November, breaking a five-month streak of declines. This uptick could signify a potential turnaround in 2024. Dr. Lisa Sturtevant, chief economist at BrightMLS, forecasts an increase in existing home sales and inventory in 2024. However, the supply of existing homes remains limited, with only a 3.5-month supply at the current sales pace, far from the four to six months considered a balanced market.

The Challenge of Affordability

Despite the positive shifts in the market, affordability remains a significant concern for buyers, particularly first-time buyers. Home prices have seen substantial growth, with a 40% increase compared to February 2020, according to Zillow. In the third quarter of 2023, home prices increased in more than 80% of U.S. metro areas year over year.

Affordability conditions have deteriorated, as highlighted by the National Association of Realtors' (NAR) First-Time Homebuyer Affordability Index. The index's preliminary third-quarter reading declined, indicating the challenges first-time buyers face. The median monthly housing payment also reached an all-time high of $2,715 in 2023, making it the least affordable year on record for homebuyers.

The Fannie Mae Home Purchase Sentiment Index (HPSI) reported that 86% of consumers felt the need to delay their home-buying plans, reflecting persistent pessimism regarding the housing market. Even if mortgage rates decline in the coming year, affordability is unlikely to improve significantly.

Will the Housing Market Crash in 2024?

Despite concerns in some areas about declining prices, the likelihood of a housing market crash remains low. Today's homeowners are in a more secure financial position than those who faced the 2008 financial crisis, with many borrowers having positive home equity. Additionally, factors such as Millennials entering their prime home-buying years, wage growth, and financial wealth act as tailwinds sustaining housing demand in 2024.

However, some caution is warranted, especially in markets where real estate investors have accumulated numerous properties. A price collapse is within the realm of possibility if external factors push the market over the edge. Nonetheless, experts agree that such a scenario is unlikely in most areas.

Reach out for more information and to schedule a tour of neighborhoods in Las Vegas, NV. Call or text (702) 718-3878 or contact us today.

Foreclosure Trends

Foreclosure activity has been a topic of concern, with a slight increase in filings nationally. However, experts do not anticipate a wave of foreclosures in 2024. The strength of the economy, including low unemployment rates and steady wage growth, along with favorable loan quality and financial relief offerings from mortgage servicers, will likely prevent a significant increase in foreclosures.

While foreclosure starts may rise in 2024, foreclosure auctions and lender repossessions are expected to remain below 2019 levels. Homeowner equity growth in recent years has played a significant role in reducing foreclosures. Approximately 80% of today's homeowners have more than 20% equity in their properties, adding to the market's stability.

Preparing for the Real Estate Market in 2024

As we navigate the real estate trends of 2024, it's essential to be prepared whether you are a buyer. Here are some key steps to consider:

For Buyers:

  1. Get Your Finances in Order: Lower your credit utilization and debt-to-income ratio to improve your credit score. Pay off high-interest credit card balances to boost your creditworthiness.
  2. Explore First-Time Homebuyer Assistance: Investigate mortgage options geared toward first-time buyers, such as FHA, VA, USDA, and conventional loans with low down payment requirements.
  3. Time Your Purchase Wisely: Consider your priorities—whether it's securing the lowest interest rate or avoiding competition—and plan your purchase accordingly. Refinancing options may also be worth exploring.
  4. Don't Rush: Take your time to make informed decisions. Evaluate your long-term goals and ensure that your new home aligns with your lifestyle and financial aspirations.
  5. Price Your Home Strategically: Work with a real estate agent to determine the optimal listing price for your property. Pricing too high or too low can deter potential buyers.
  6. Enhance Curb Appeal: Invest in minor home improvements and staging to make your property more appealing to potential buyers. A well-maintained and attractive home can fetch a higher selling price.
  7. Be Flexible: In a competitive market, flexibility can be an advantage. Consider offers with favorable terms, even if they are slightly below your asking price.
  8. Consult a Professional: A real estate agent can provide valuable insights and assistance throughout the selling process, from listing your home to negotiating offers and closing the deal.

How Can Sellers Prepare for the Real Estate Market?

Sellers can take several steps to prepare for the real estate market and maximize their chances of a successful sale.

  • First, it’s crucial to work with a knowledgeable and experienced real estate agent who can provide valuable insights, market analysis, and guidance throughout the selling process.
  • Next, sellers should consider making necessary repairs and upgrades to their properties. Addressing any maintenance issues and enhancing the curb appeal can make a significant difference in attracting potential buyers.
  • Pricing the property appropriately is also crucial. Sellers should work with their real estate agent to determine a competitive and realistic listing price based on market conditions and comparable sales in the area.
  • Lastly, staging the home and showcasing its best features can help create a positive impression on potential buyers. Decluttering, depersonalizing, and arranging furniture to highlight the property’s strengths can make it more appealing.

What Impact Will New Construction Have on the Real Estate Market in 2024?

New construction plays a crucial role in meeting the demand for housing and shaping the real estate market. In 2024, new construction projects are expected to continue in response to population growth and evolving buyer preferences.

Increased construction activity can have several impacts on the market. It can contribute to a higher housing supply, potentially easing price pressures in some areas. New construction also presents opportunities for buyers to find properties that meet their specific needs and preferences, such as modern amenities, energy efficiency, or customizable features.

However, it’s important to note that new construction projects take time to complete, and the impact on the market may vary by region. Additionally, construction costs, labor shortages, and regulatory factors can influence the pace and affordability of new construction.

Conclusion

In conclusion, the real estate trends of 2024 offer a mixed bag of opportunities and challenges for buyers and sellers alike. While some markets may see a slight easing of home prices, affordability remains a concern, and inventory shortages persist. It's crucial to stay informed, be patient, and make well-informed decisions based on your individual circumstances and goals. With the right strategy and guidance, you can navigate the evolving real estate landscape with confidence.

Disclaimer: *Disclaimer: This material is provided for information purposes only and is not to be construed as financial, investment or tax advice. Readers are strongly advised to consult with their professional advisors regarding the information herein.

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