This year is already off to an exciting, energetic start, so we wanted to share our market predictions for 2024.
Last year’s unprecedented spike in interests rates slowed the market drastically. However, we were encouraged to see 30-year fixed rates drop to 6.56% at the end of December, down 1.27 points from the 2023 high of 7.83% at the end of October. The Fed has insinuated that rates will continue to fall this year, and we have already seen reports forecasting they could come down 6 times in 2024. While that would be great, we don’t expect them to drop quite that many times. We do expect they will drop 3 times this year if things continue to trend in the direction they have. We believe anything below 6% will re-engage buyers and sellers who’ve been on the sidelines, wary of the market’s direction.
If the drop in rates prove to be true, the gap between a seller’s current interest rate and the market rate might not be as insurmountable as before. This would allow sellers to re-enter the market which, in turn, would increase inventory. Despite interest rates, demand has remained high through the last year, and if rates fall, we expect buyers and sellers will feel more confident about making a move this year. In the end, however, inventory will remain tight. The number of houses on the market is still far outpaced by demand.
Year in review
Uncertainty seemed to be the overarching theme of 2023. Whether there was uncertainty in rising interest rates, inventory, or market stability, we seemed to consistently be answering questions about these unpredictable factors. We felt confident all along that a major correction was unlikely, but inventory and interest rates were not something anyone had a reasonable handle on predicting. The year in Real Estate was slow and plodding and left many buyers frustrated and unsure about how to respond. Prices and interest rates were simultaneously rising, which was not conducive to buying a home. While numbers of sales were down (20% less that 2022), inventory was still far below demand, and homes still appreciated healthily throughout the year (6% gain over 2022). This is a greater decrease in volume than we had hoped for, but is also encouraging news about future appreciation, as the appreciation in recent years was unsustainable (median net housing value appreciated 44% between 2019-2022).
While we’re all optimistic (and salespeople), we also try to remain realistic so you can be as well-equipped and informed as possible. As a team, we have a much more positive outlook on the market this year, and we believe the current trends support our view. The biggest factor we see is the drop in interests rates - this will certainly bring more buyers and sellers back into the market that have been sidelined over the past year. We have also
seen considerably more activity in the last few weeks than we saw in the first few months of 2023. We know that seems like a simplistic view, but we always have to remind ourselves that any news we read about the Real Estate market is about 45-60 days behind what is happening in real time. Today’s market won’t be accurately reported in the press until the end of February. We have had far more clients reach out about buying and selling since the holidays than we did for the first two months of last year.
With more potential interest rate drops exp
ected, we believe the market will only strengthen throughout this year as compared to last.