A Market Rebound: Home Sales Climb After Three-Year Slump

In the 41 years I've been a Realtor® I've seen all kinds of markets. In the past several years we've seen rates dip as low as 2.65%. We were already in a crazy Seller's Market when that happened. Buyers couldn't get their offers accepted unless they were way over the asking price. Many of those buyers gave up and continued renting or remained in their current homes.

Then in October of 2023, rates jumped to 7.79%, which not only ended the Seller's Market we had been experiencing but cut sales dramatically. We were now seeing price reductions, an increase in time on the market, and expired listings. These were things new agents had never experienced if they got into the market when the Seller's Market started. Read my recent post about current mortgage rate fluctuations.

This wasn't the first Seller's Market I had experienced. I've been through recessions, buyers and stable markets. I had never seen mortgage rates in the 2-3% range and never thought I would. The last big Seller's Market I remember was when interest rates had fallen to 8.5%! It wasn't as crazy as the last one was, but I do remember some buyers giving up because they couldn't get their offers accepted. The difference back then was that offers were maybe up to $10,000 above the asking price for those buyers who could afford it, not $100,000+ like in the most recent Seller's Market. With the prior market, buyers weren't forgoing home inspections or making up the difference with low appraisals.

So where are we now? I'm usually a positive person but the last few years have been challenging in real estate. I am finally feeling good about 2025. Even if buying a house isn't in your immediate future, understanding the housing market is super important – it affects everything from rent prices to the overall economy. Let's break down what's happening in simple terms.

People are saying the past few years in real estate have been a rollercoaster ride, but for agents like me who have been in the business for decades, the big picture is that it's always been a rollercoaster ride with many ups and downs. The most recent market in most areas has been in a downturn. Some real estate gurus, and plain old data, are shining a positive light for the upcoming year. 

The Big News

For the first time since 2021, more people are buying existing homes (that's houses that have been lived in before, not newly built ones). In October, home sales hit 3.96 million and in November it was 4.15 million. 

So, what exactly does this mean for you? Whether you're a homeowner looking to sell or a buyer searching for your dream home, this shift in the market could be a game-changer. Let's break down the key trends and what they mean for you.

Breaking Down the Numbers

Imagine you're playing Monopoly, but in real life. The housing market has been kind of weird for the past few years – prices were super high, there weren't many houses available to buy, and getting a loan (mortgage) was expensive. But now, things are starting to change. After a long stretch of slow home sales, the National Association of Realtors (NAR) has identified three main trends that are worth paying attention to.

Three Major Changes You Should Know About:

1. Houses Are Selling (And Getting More Expensive)
This means that homeowners are seeing their equity grow as prices climb. In October, the median existing home price rose to $407,200 (this is a nationwide figure), which is a 4% increase compared to last year. For homeowners, this is great news, as it means you can sell your home for a higher price and potentially make a profit.

What This Means:
- If you own a home, it's probably gaining value
- Renting might get more expensive as property values increase
- First-time buyers might need to save more for a down payment

2. More Houses Are Available to Buy
If you've ever tried buying something that was super popular, like children's toys of the time (Tickle Me Elmo anyone?) or Taylor Swift tickets, that's kind of what the housing market was like. But now, there are 19% more houses available compared to last year. This is huge because:
- Buyers have more choices
- There's less pressure to make rushed decisions
- Prices might become more reasonable due to seller competition

3. People Are Getting Back into House Hunting
Even though getting a mortgage (the loan you need to buy a house) is still pretty expensive – around 7+% interest rate for a 30-year conventional loan last week – people are starting to buy houses again. Why? A few reasons:
- Jobs are stable
- People are feeling more confident about the economy
- They're getting used to higher interest rates

What Does This Mean for Your Future?

If You're Thinking About Moving Out of Your Parent's House Soon:
- Rent prices might still be high, but you might have more options
- Consider having roommates to split costs
- Keep an eye on areas where new apartments are being built

What Does it Mean for Buyers?

While mortgage rates are still higher than a few years ago, they're stabilizing, and Lawrence Yun, the Chief Economist and Senior Vice President of Research at the National Association of Realtors predicts they could dip into the lower 6% range in 2025. This means that buying a home might become more affordable in the future.

If You're Planning to Buy a House in the Next Few Years:
- Start learning about mortgages and how they work
- Begin saving money now (seriously, every little bit helps)
- Watch for changes in interest rates
- Consider different neighborhoods and areas – sometimes less popular areas become the next hot spot

Tips for Understanding the Housing Market:

1. Follow the Money
- Keep an eye on interest rates (they affect how much you'll pay monthly)
- Watch housing prices in areas you're interested in
- Learn about down payments and what you'll need to save

2. Understand the Basics
- Learn the difference between renting and buying
- Understand what a mortgage is and how it works
- Know what factors affect housing prices

3. Think Long-Term
- Housing markets go up and down – it's normal
- Location matters a lot
- Your first home probably won't be your dream home (and that's okay)

Looking Ahead to 2025
Experts think things will keep changing:
- Interest rates might go down a bit
- House prices could keep going up
- More houses might become available

What You Can Do Right Now:

1. Start Learning
- Read articles about personal finance
- Watch YouTube videos about real estate
- Talk to people who recently bought homes

2. Start Saving
- Open a high-yield savings account
- Learn about different types of investment accounts
- Create a budget and stick to it

3. Build Your Credit
- Get a starter credit card if you haven't already
- Always pay bills on time
- Keep your credit utilization low

What Does it Mean for Homeowners?

If you're a homeowner, this is great news. The rising prices mean that your home is likely increasing in value, and you may be able to sell it for a higher price. Lawrence Yun, Chief Economist for the NAR, predicts that home prices will continue to rise over the next two years, with a 9% year-over-year increase in 2025 and a 13% year-over-year increase in 2026. This means that your home could be worth even more in the future, making it a great time to sell.

If you're considering selling your home, now may be a great time to act. With prices still rising and demand picking up, listing your home soon could help you attract serious buyers and secure a strong return. Just keep in mind that more inventory means your home needs to shine. With more inventory on the market, it's essential to prepare your home to stand out from the competition. This means staging your home, pricing it competitively, and marketing it effectively to attract potential buyers. No matter how slow a market is, there can still be multiple offers on a home that is the best in the price range.

I can help you stage your home at no fee. I am not a professional stager but my experience will help you show your home at it's best. I know what buyers want, and you might be surprised by my recommendations. I will give you ideas that will cost little, if anything. I have had sellers astounded at how good their homes looked after following my advice (and most spent nothing). I've had people jokingly say that they love their house now and don't want to sell it. Well, I actually had one family follow my advice and they decided they no longer needed to sell after all. I did get future business from them years later.

Actionable Insights - Summing it Up

For Homeowners:

* Prepare your home to stand out from the competition by staging, pricing it competitively, and marketing it effectively.
* Consider listing your home soon to attract serious buyers and secure a strong return.
* Keep an eye on the market trends and adjust your strategy accordingly.

For Buyers:

* Take your time to explore your options and find the perfect home that fits your needs and budget.
* Get pre-approved for a mortgage and understand your budget before starting your home search.
* Stay patient and don't rush into a purchase, as the market is still recovering.

Looking Ahead

The housing market is dynamic. While it's impossible to predict the future with absolute certainty, understanding the current trends can help you make informed decisions about your housing needs, whether you're a buyer, seller, or just an interested observer. Remember, these trends are national and your local market might behave differently. It's always a good idea to consult with local real estate professionals for personalized advice.

Buying and selling real estate can be complicated, but understanding it doesn't have to be. Whether you're planning to rent your first apartment or thinking about buying and/or selling a house soon, knowing what's happening in the market can help you make better decisions about your future.

Remember: The housing market changes all the time, so what's true today might be different in a few months. Stay informed, keep saving, and don't be afraid to ask questions. Your future self will thank you for paying attention to this stuff now!

Want to Learn More?
Check out resources like:
- National Association of Realtors website
- Financial education websites
- Local real estate websites - like this one
- Personal finance podcasts

Knowledge is power, especially when it comes to big life decisions like housing. Stay curious and keep learning! Give me a call if you have any questions - Judy Orr - 480-906-1500. Or email me at judyorr@judyorr.com or use the Contact Form.