I’d like to share my insights and forecast for the housing market in 2024, drawing from the valuable analysis of many industry leaders that I believe have a clear pulse on the economy and trends. I will also say that I don’t have a crystal ball. As there have been in the past, there will continue to be unanticipated changes in the market that will demand that this housing and interest rate forecast be updated periodically. This overview is aimed at helping you, my clients, navigate the upcoming market trends with confidence.
As we step into 2024, it’s crucial to have a clear understanding of the housing market’s direction.
Understanding Mortgage Rates: Think of mortgage rates like the weather – they can change based on what’s happening in the bigger economic picture. The 10-year yield is like a thermometer for these rates. If it goes up, so do the rates, and if it drops, the rates usually follow suit. Last year we saw interest rates start out at 6.48% and rise to just over 8%. After that peak, we have drifted back down into the mid 6% level and even lower for some homeowners. I am expecting to see us continuing this downward trend that began in November, bringing us to just under 6% by the end of the year. This year, we’re keeping an eye on these changes to help you figure out the best time to make your move. It’s a bit like finding the perfect day for a picnic – we want the conditions to be just right for you.
The Federal Reserve: The Federal Reserve, kind of like a big boss, sets some rules that affect how much borrowing money costs. Right now, they’re being pretty strict, which means borrowing money isn’t as cheap as it could be. Their decisions can make a big difference in your mortgage rate, so we’re watching them closely. In 2023, we saw an aggressive stance by the Federal Reserve where they increased the Fed Funds Rate at a rapid pace which certainly had a negative effect on the housing market. In December, they decided to pause their rate hikes and we are expecting to see a reversal and perhaps 3 rate decreases by the end of the year. We expect this to contribute to a reduction in home loan rates and we have already begun to see this taking effect.
Who’s Buying Houses and How Many Are for Sale: Imagine a dance floor where buyers and sellers are partners. Right now, we need the right music (lower mortgage rates) to get more dancers (buyers, especially first-timers and younger folks) onto the floor. At the same time, we need enough dance partners (houses on the market) to keep things balanced. If we get this balance right, we’ll have a great party (a healthy housing market) in 2024. We have seen that with the interest rates as high as they have been, fewer folks have wanted to put their home on the market, for fear of their next home costing more than the one that they would be leaving. With this lack of inventory on the market, home prices have continued to rise because we have more buyers than sellers. Many are expecting that with lower interest rates, we will see more inventory, however I expect that the lower rates will bring a disproportionate number of buyers into the market at the same time. As a result, home prices will continue to rise.
House Prices – Not Too Hot, Not Too Cold: House prices are a bit like porridge – we don’t want them too hot (rising too fast) or too cold (falling). This year, we’re expecting prices to be just right – increasing a little but not too much. This is good news because it means the housing market is stable.
Staying Up-to-Date and Ready for Change: The housing market might have unexpected twists and turns in the coming year. That’s why my team and I are dedicated to bringing you the latest information. We will put it into messaging that addresses what it means for you. Whether it’s good news or a bit challenging, we’re here to help you make sense of it all.
In summary, as we navigate through 2024, it’s important to stay informed and adaptable. Whether you’re a first-time homebuyer or a seasoned investor, understanding these market dynamics is crucial in making well-informed decisions. My team at StreicherTeam is here to guide you every step of the way, ensuring a smooth and successful home financing journey in the year ahead. If you would like to schedule a personal consultation with StreicherTeam CLICK HERE.