No one knows where mortgage rates are headed for sure, and the experts we talked to recommend not focusing on it. Forecasts around both home prices and housing inventory vary wildly depending on where you are. Regardless of the market, home buyers and sellers need to determine for themselves whether it’s the right time to make a move based on their personal and financial situation.
2023 Real Estate Trends
The average rate on a 30-year fixed mortgage is up 0.81% since this time a year ago, now at 7.76% as of November 2023, according to Freddie Mac. Part of the reason for the mismatch between prices and interest rates probably comes down to inventory. In 2022, total housing inventory between new and existing home sales was 5.674 million, based on data from the National Association of REALTORS® (NAR), the Department of Housing and Urban Development (HUD) and the Census Bureau. Projections through September for 2023 have total inventory at 4.719 million.
Housing Market Forecast For 2024
The reality is mortgage rates have been on a steady upward trajectory since the end of 2021. Some real estate agents see opportunity in the current market, advising clients to “Buy now before the interest rate goes down.” Others, like Laura Mori in Florida, encourage clients to think about buying now versus later as a math problem.
While the anecdotal evidence in the news media may have portrayed homes selling quickly for high prices, Rocket Homes data for January through September 2023 tells a different story. The best month for sellers was June, with homes selling for 104% of the asking price, while January was the best month for buyers, with homes selling for an average of 96% of the list price.
The supply of homes relative to the current pace of sales is a critical factor. Existing home sales and new construction play a role. Some areas, like the northern corridor of Dallas, continue to see rising prices due to low inventory. Others, like Northville, Michigan, experience sellers in denial about dropping prices. The bidding wars continue, especially at lower price points, due to low inventory.
Will The Housing Market Shift Into A Buyer’s Market?
Factors such as increasing inventory and moderating interest rates would stabilize the housing market. However, the question remains, will the housing market shift into a buyer’s market in 2024?
Factors That Could Stabilize the Housing Market
Two significant factors include an increase in inventory and a moderation in interest rates. While it would be ideal for rates to come down, any halt in their upward trajectory could be considered a win. However, reaching the lower rates seen in 2020 – 2021 might require a macroeconomic shock.
Preparing for the Real Estate Cycle
Buyers and sellers should be proactive in preparing for the real estate cycle. Improving qualifying factors, figuring out a budget, securing mortgage preapproval, and making a strong offer are essential steps for buyers. Sellers, on the other hand, need to be ready for everything that comes with a move, including making necessary home repairs and upgrades.
Should I Buy a House Now or Wait?
This decision ultimately comes down to whether the buyer is financially ready. Focusing on the monthly payment is crucial, and waiting may provide time to save for a down payment and work on credit. However, buyers need to closely follow local trends and rely on a real estate agent for guidance.
The Bottom Line
Real estate trends in 2023 have set the stage for a dynamic 2024. Whether you’re a buyer or seller, being informed and prepared is key to navigating the ever-evolving housing market.