Here are some predictions for the housing market in 2024

In most markets, home prices will rise and stay stable in 2024.

Our virtual Housing Market Update event is more comprehensive than a Fed meeting and gives you the data to develop your strategy for operating in 2024. These economists explain what it means for you in the brutally sick housing market that exists right now.

Nationally, there are over 5.2 million sales of existing homes in a given year, and property values increase by roughly 4%. But “typical” hasn’t been seen in a very long time. Home sales in 2023 are probably going to be at their lowest point since 2010, and even if sales activity is expected to increase in 2024, the volume of transactions will still be below normal.

Although there is a great deal of uncertainty in the property market and the economy, there are a few things we can bank on.

Mortgage rates will start to decline in 2024, but they won’t return to epidemic levels after hitting a more than two-decade peak in the fourth quarter of 2023. Mortgage rates have entered a new era, and potential homeowners should anticipate that rates will ultimately fall between 6% and 6.5% in the upcoming year.

Expectations will be adjusted by consumers, and as interest rates decline, the market will see an increase in both buyers and sellers.

It will become a game of “Which came first, the chicken or the egg?” to predict where property values will go. Home prices may decline in the first half of 2024 if sellers are lured back into the market before first-time buyers return. If prices do drop nationally, they will be slight and transient since, by historical standards, there will still be a relatively small amount of inventory. The least expensive markets in the nation, which includes several significant coastal cities, are those with the highest potential for price adjustments.

We can expect a competitive market with rising prices if buyers return to the market before sellers.

Because there are more offers in the rental market in the early months of 2024, prospective first-time buyers might decide to stay away from the for-sale market. In certain locations, renting is more appealing than buying due to record-breaking rates of new apartment development that have resulted in rent reductions and concessions.

Still, there is a great desire to become a homeowner. Strong demand and limited inventory are predicted by the underlying demographic factors for 2024 and the remainder of the decade.

The oldest millennials are currently in their early 40s, but this generation’s homeownership rates are much lower than those of previous generations, and the average age of a first-time homebuyer (36) is the highest on record. There would be 740,000 more homeowners in the United States if millennials bought homes at the same rate as Gen Xers or young boomers did at the same age. That is a sizable amount of unmet demand, part of which is contingent upon a rate decline and increased supply in 2024.

The other significant generational group impacting the market, boomers, will also play a major role in the low supply of goods even if inventory will rise slightly in the upcoming year. Boomers are remaining longer in their houses. The decreased rate of listing activity has also been attributed to sub-3% mortgage rates and a dearth of properties suitable for downsizing.

The main cause of property prices’ steady growth in most markets in 2024 will be these demographic variables.

There are possible wildcards to take into account. There’s always a chance that another coronavirus strain could emerge and pose a hazard. Consumer fear may be increased by geopolitical dangers and the economic downturn, which could reduce the number of people purchasing and selling homes. Furthermore, even while in previous cycles presidential elections have little effect on the property market, this year may be different if the political environment continues to deteriorate.