The world of real estate is in constant flux; therefore, it is imperative for anyone looking to buy a home or sell a home to know the current real estate market. As we enter the year 2024, it is essential for both buyers and sellers to be able to understand the market and know their options. This article will give you a snapshot of the current real estate market and what it can mean to you as a buyer or a seller.
I've been working with many real estate buyers who didn't take advantage of the low rates of 2021 and before. At the time, they weren't upset about the mortgage interest rates, but they were shocked by the quickly rising prices. I've had buyers in 2022 who said they would wait until 2023 when they felt prices would plummet. A few potential buyers thought prices would lower by around 20%. That hasn't happened, but what did happen in 2022 was continually rising interest rates.
This changed many buyers' abilities to purchase. Some were completely priced out of the market while others had to take a step or more down from the house they wanted to something smaller, like a single-family home to a condo instead. Some buyers wanted to buy Scottsdale real estate but could no longer afford such high and rising prices, so they had to choose another more affordable area.
Do you know that once interest rates started rising by more than double from the previous lows the real estate market faced the slowest downturn since 2008? Yet unlike in '08, prices didn't go down in most places, especially the Greater Phoenix area. Why? Because most areas are facing low inventory. There are still buyers out there but not much to choose from.
So what is the forecast for the real estate market in 2024? I don't have a crystal ball, and even with my 40 years of real estate experience, the past few years have been crazy. So I've done some research and will quote some real estate gurus. You can read past blog posts of predictions from my list below and see if any of those people were right.
What Is Going to Happen With These High Mortgage Rates?
There's a glimmer of hope on the horizon as December brought news from the Fed that they're putting a pause on interest rate hikes. There's even talk of a potential 0.75% rate cut in the next year. Although mortgages don't precisely mirror the federal funds rate, they often go hand in hand. This could mean more affordable home loans are in the cards.
Most buyers I have talked to are more worried about rising home prices. That's until they see how current high interest rates can affect their purchasing power.
For example, a $500,000 mortgage with 20% down at a 3.5% interest rate comes to $1,796.18 a month without taxes, insurance, and HOA, if any, plus any MIP or PMI. That same amount at 8% shoots up to $2,935.06. That is a huge difference!
The average Scottsdale real estate sold price is over a million dollars. Last month (December 2023) the average home in Scottsdale sold for $1,190,214. So to make easier math, let's see the difference between 3.5% and 8% for one million even.
3.5% for a million-dollar home with 20% down payment = $3,592.06/month
8% interest rate brings that amount up to $5,870.12/month
Again, these amounts do not include taxes, insurance, HOA fees, or any MIP or PMI (Mortgage Insurance Premium charged by FHA and Prive Mortgage Insurance for a conventional purchase with less than 20% down). Look at that increase in the basic monthly mortgage rate!
There's a glimmer of hope on the horizon as December brought news from the Fed that they're putting a pause on interest rate hikes. In fact, there's even talk of a potential 0.75% rate cut in the next year. Although mortgages don't precisely mirror the federal funds rate, they often go hand in hand. This could mean more affordable home loans are in the cards.
Expect Consistency: What to Anticipate in the Stability of Home Prices
Even with mortgage rates hovering around 8%, the anticipated dip in home prices for 2023 didn't materialize. Surprisingly, U.S. property values, on average, closed the year on an upward trend, offsetting declines in certain regions with appreciation in others.
Normally, higher interest rates reduce demand, leading to lower prices. So, what's preventing this normal cycle with housing prices?
According to Altos Research's Mike Simonsen, "Declining home prices probably require that supply-and-demand imbalance, and what we have is really a balance. There’s a balance between low demand and low supply.
Experts predict this balance will continue to support property prices in 2024, though the specific forecasts differ. Realtor.com's economists expect a minor reduction of 1.7% in the average home price. On the other hand, Fannie Mae foresees a modest increase of 2.8%. I'm surprised at Realtor.com's prediction as we haven't seen anyone (besides hopeful buyers) state the idea of prices dropping at all.
However, the consensus among experts is pretty much unanimous: The major influence on property prices will be mortgage rates. A faster-than-anticipated drop in rates could encourage more people to buy, potentially sending house prices going upwards, which would definitely knock down Realtor.com's forecast. We just won't know who is right until the year progresses.
There's no sign that home prices will undergo a significant drop anytime soon. Therefore, if you're prepared and have the financial means to purchase a home, now could be an excellent time to act. The best deals can often be found in a sluggish market, such as the one we’re currently in. Reach out to us to discuss your wants and needs and we'll help get you on the path figuring out your financial capabilities.
For those contemplating selling, this might be your year. With the slowdown in price growth, seizing the moment could maximize your equity gains while minimizing competition. Reach out to us, we'd love to give you some advice and estimate how much your home could fetch in the current market. Give Judy Orr a call at 480-906-1500.
Low Housing Inventory is Expected to Continue
Would this year offer home buyers more options? The National Association of Realtors® (NAR) Chief Economist Lawrence Yun has been featured in every annual market forecast I've written over the past few years. He states, “Pent-up sellers cannot wait any longer. People will begin to say, ‘life goes on. Listings will steadily show up, and new home sales will continue to do well.”
As usual, not all concur. Economists at Realtor.com are less positive and anticipate an up to 14% fall in inventory this year. The deficit of existing homes for sale is worsened by consistent shortages in new construction. Single-family housing starts dropped 10.3% in 2023 and 11.2% in 2022.
Mark Fleming, Chief Economist at First American Financial Corporation, maintains that the U.S. falls short of a million homes. The crisis will only alleviate when homeowners return to the market. “The market will normalize only when more homeowners decide to sell and buy again,” he said. Current homeowners are reluctant to give up their low interest rates from refinancing in the past and are only selling if they really need to. Those reasons could be a job transfer, downsizing, really needing a larger place, or having to be closer to family.
How Home Buyers Can Capitalize on 2024 Real Estate Opportunities
Are you aiming to snag the perfect home in 2024? It's all about jumping on those one-of-a-kind market chances that pop up. With a whole arsenal of tools and resources right at your fingertips, you've got what it takes to turn that dream pad into your own address. Get ahead by being sharp—research like crazy and be quick to make a move when everything aligns.
You gotta stay synced with the real estate rhythm, for sure. Keep tabs on those interest rates, keep an ear out for government sweeteners, and know exactly how solid your finances are—you don't want any surprises there! You should work on getting pre-approved vs just prequalified since even though the market has slowed down, the best deals might still have multiple offers, and you want yours to stand out. Since the Fed has suggested that interest rates will be lowered, you might not want to lock in a rate until it's closer to closing.
Make sure you're signed up with your real estate agent for an automated home search directly from the MLS. Did you know that online websites like Zillow don't always have all of the listings? Not every brokerage allows their listings to be shared by 3rd party real estate websites. The MLS will provide you with all of the currently listed properties in your area(s). An automated MLS search will alert you to new listings and as a Scottsdale real estate agent, I can set these up to notify you as soon as they hit the market, daily, or weekly. Agents in other MLS's can most likely do the same.
Essential Tips for Home Sellers in the 2024 Market Forecast
If you're selling your home in 2024, guess what? You've got some pretty interesting cards to play. Knowing how to work those cards can really amp up your game. Get strategic and a tad market-savvy – that's how sellers like yourself can master the little quirks of today’s housing scene and snag the win. Let's kick things off with presentation—your house isn't just another listing; it deserves to be put on display! A beautifully staged space is downright magnetic; it draws buyers in right from the start. I can help with that!
And let’s talk numbers for a sec: pricing is super important too. It's like walking a tightrope—you don’t want to overshoot or sell yourself short by playing shy with the price tag, right? If you dive into researching local comps (that’s real estate lingo for ‘comparable sales’), you'll craft that sweet spot price point which will get those buyers buzzing around your place faster than bees on honeycomb—it boils down not just to personal value but also staying savvy about what dollars make sense according to current trends. I can help educate you to price your house to get showings and offers in today's market.
Marketing has evolved way beyond just sticking a sign in the yard and having it appear online. Here we are, facing 2024, and you’ve got to have all angles covered—think stunning visuals like high-quality images and engaging virtual tours that bring properties to life. Don’t forget about harnessing the power of social media; it’s key for blasting information out far and wide. I go one step further and provide national and international advertising.
If you're selling your home, embracing this kind of full-blown marketing tactic helps throw a wider net—you'll reel in an array of interested buyers from different walks of life. Just as buyers need to be flexible, so do sellers! Staying open-minded about negotiations and accommodating buyer schedules might just tip the scales toward sealing that deal.
Sellers can make the most of the scarce housing inventory, but should brace themselves for competition from new homes on the block. Sellers who stay nimble—ready to pivot according to what today's market pulse is saying—and attentive to buyer needs set themselves up nicely for smoother sales processes...and perhaps even scoring better deals than expected!
Let Us Be Your Navigators
Real estate is largely a local affair. As the insiders in your local Greater Phoenix real estate market, our knowledge can interpret which factors may influence sales and property values in your vicinity. Our mission? To keep you abreast of any market changes and confidently navigate you through your unique property journey.
Planning to buy or sell a home this year? We're ready for a chat with you now, absolutely free of charge and with no obligation. It'll be a partnership where we strategize together to accomplish your housing aims. Call Judy Orr at 480-906-1500.Posted by Judy Orr on