Lower rates, more listings: What lies ahead for housing this year
Every year, market forecasts are put together to help agents get a perspective for what’s ahead. They’re based on the latest expert insights and data, giving you the projections you need to educate yourself and your sphere.
This year, however, is a little more interesting. Because while it’s normal for experts to re-forecast throughout the year, many of them are already being updated – and for the better. Plus, in our opinion, even some of the revisions are a bit low.
The market is moving quickly, yet again, and it’s shaping up to be a very promising year for the agents that are ready to put in the work.
We’re calling it “The Year of the Fives” because we believe we’ll see:
‘5’ as the handle (the first number) on mortgage rates.
After what feels like forever, we’re finally seeing some relief as mortgage rates have trended downward in the past few months. That comes after mortgage rates peaked around 8% at the end of October last year.
Now, the most important expectation you can set for your clients is that they shouldn’t hold out for rates to hit the 2-3% range we saw in the ‘Unicorn’ Years of 2020 and 2021.
That’s unlikely to happen anytime soon – and possibly never again.
What they can expect is that as we get through inflation and other economic challenges, we will see mortgage rates slowly come down.
Many experts are already calling for rates to go into the low sixes and high fives by year end. We believe this may happen faster – as soon as the end of May.
Since mortgage rates will be one of, if not the biggest player in this year’s market, there’s no better way to be armed with the latest insights and tools that come with a KCM Membership.
About 5.5 million in total home sales.
A survey done by FHFA found that about 79% of mortgage rates at the time of origination are less than 5%. So, with mortgage rates hitting around 7-8% last year, it’s understandable why many homeowners decided to stay put.
On the other side of that, 72% of buyers paused their home search completely because of mortgage rates last year according to Bright MLS.
But mortgage rates are projected to continue to drop this year.
That would improve affordability for buyers and make it easier for sellers to move since they won’t feel as locked-in to their current, low mortgage rate. In fact, we’re already seeing this trend kick into effect.
The current projection for homes sales is around 5 million existing and new homes sold in 2024. However, we believe that number will adjust with time, possibly reaching as much as 5.5 million in total home sales by year end.
5% approximate home price appreciation rate.
The third and final piece to this is home price appreciation. But here’s the thing. It is still a sellers’ market.
Why? Because prices are driven by supply and demand, and we still have a low supply of homes on the market.
And as mortgage rates drop, experts project that many of those hesitant homeowners could be more motivated to move.
This means continued upward pressure on home prices as the number of buyers increases too. Selma Hepp, Chief Economist at Corelogic, sums it up best:
“With mortgage rates dropping, demand for homes in early 2024 is likely to be strong and will again put pressure on prices, similar to trends observed in early 2023 . . . Most markets will continue to reach new home price highs over the course of 2024.”
The average projection for home price appreciation is currently at 2.6%. However, it’s only February, and projections often update throughout the year.
Looking at the data and market trends already in motion, we think we will end this year closer to 5% approximate home price appreciation.
The motto for the 2024 housing market: seize the opportunity or get left behind.
This year is already starting off on a better foot, and there’s tremendous opportunity for those who stay focused and put in the work.