With the housing market experiencing several unusual trends lately, many home buyers and home sellers are more curious to know what the future holds for the industry. The past two years have been a seller’s market, with home sales often exceeding the listing price. However, is the trend going to continue into 2023 and 2024?
Real estate professionals share their views on the market projections for 2023 and 2024 — really, housing prices depend strongly upon housing supply, housing inventory, interest rates, and buyer demand.
Due to economic hits and inflation across the country, many economists predict that the market may cool down — with home prices remaining flat, and mortgage rates rising through 2023 into 2024.
This article will highlight some key projections and housing market predictions you may want to consider as a home seller.
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House Market Trends 2023
Looking at year-over-year variances, 2021 was a massive sellers’ market, with homeowners able to net thousands of dollars above the listing price for single-family homes. However, things have changed, and 2023 sales price predictions vary from both last year and 2021.
Regardless of whether you utilize a real estate agent, this year currently depicts home prices lowering slightly for the first time in a long while. Sellers should prepare for a slower market with a greater average number of days on the market. More people are hesitant to become involved in home ownership.
The market may also flatten. Home prices aren’t at all-time highs, but rates are not plummeting any time soon. Given the risks of inflation and tough economic times many homeowners have faced across the last couple of years, the market may maintain a flat rate, with little price growth, throughout the rest of the year.
House Market Inventory
The inventory of the current housing market has been considerably low since the 2008 crash, which saw new home construction plummet. The inventory has never really improved, and there are no hopes of improvement in 2023 — especially in comparison to the demand.
Despite this, some experts predict an increase in home inventory toward Q4 of 2023.
Sellers waiting for a turnaround in the market might release their properties in 2023, as they wait for the median home price to increase. But this, too, may not have a significant impact.
This is especially true, given that many property owners are uninterested in buying back in with the current state of the US housing market. Housing market inventory does drive median sales price and can impact the housing market forecast.
How the Current Economic Outlook is Impacting Home Sales
The current economic situation is affecting the housing market negatively.
The struggles have caused a significant plummet in median prices and the number of homes. Homeowners are exceedingly reluctant to sell and buy back in, as they fear a drastic change from a mortgage rate of 2-3% to 6-7%. Housing market trends seem to indicate a potential upward pressure on home pricing, considering the scarcity of inventory and the aforementioned “lock-in” we’re seeing.
An increase in renters and the corresponding increase in rates from lenders is resulting in a current downturn in home prices and an overall decline in home sales, as many become reluctant.
Also, affordability is rapidly declining, with the financial costs hitting the fan for some homebuyers, especially over the past two years. However, it’s not all gloomy, as the employment rates aren’t at their worst. Thus, the buyers will purchase a home, provided the market price gets affordable.
Inflation Impact on Real Estate
Inflation hit hard in 2022. At the beginning of this year, inflation reached 7% before rising to the highest rate in 40 years (9.1%) in June 2023. The high inflation rates are a threat to both home buyers and sellers.
With the rising cost of living and financial pressure resulting from inflation, it’s normal to wonder whether you should sell your house fast in New Braunfels, TX, or wait for the situation to improve.
Following what’s happening in the housing industry and hearing experts’ views on inflation will help you make sound decisions. Like tough economic times, inflation has its share of impacts on the industry that will significantly change your outcomes. Here are some trends you need to look out for.
The Prices of Homes Are Declining
The cost of living is at its highest when inflation reaches its peak. Thus, home sellers eyeing the housing market now will probably have to put up with lower property prices.
Unlike in 2021, when home buyers had extra cash to pay more dollars above the listing price, inflation has pushed the living costs up everyone’s throat, making it hard to afford high-priced homes.
Apart from the empty wallets, mortgage rates are also rising. Thus, many homebuyers may consider putting aside the idea of buying a home until things cool off a little. All these factors may affect the demand for homes and lower prices in 2023, even after performing all the necessary improvements for your San Antonio house.
Houses May Take Longer To Sell
Recent years have seen houses selling at record-high rates.
Data on Statista.com, for instance, indicates that home sales in 2021 reached a record high since 2006. Inflation eating into consumers’ pockets and fear of buying back in at a higher interest rate may cause potential home buyers to rethink their decision to acquire property in 2023.
That will undoubtedly lead to stagnation in real estate markets, making homes last longer on the listing before finding buyers.
Homes’ Values May Dither
Real estate has always been among the most appreciated assets over time. However, inflation may waver the value of houses across the industry.
Inflation has a significant impact on various aspects of the home markets. For instance, mortgage rates are soaring high, assets are increasing in profit, and long-term debts are losing value.
Mortgage Rate Increase Forecasts 2023-2024
Mortgage rates reached a peak of 6.95% in July 2023. That’s a blow-up from the 30-year fixed rate of 6.5%. While homebuyers are hopeful, experts indicate that the mortgage rates may increase in 2023 or remain flat the whole year. In case of a decrease, experts project that mortgage rates may decline in 2024, but not to the rate before inflation.
One of the reasons the mortgage rate is increasing is due to the review of the Federal Reserve interests. The Fed Reserve increased its interest rates to stay at par with inflation.
While the reserve doesn’t affect mortgage rates directly, any slight impact on the former significantly impacts the latter.
Thus, experts are looking at the possibility of mortgage rates increasing or flattening through 2023. However, there are hopes for lower mortgage rates by 2024, as experts from the National Association of Realtors (NAR) predict a drop in the rates, with the 30-year fixed mortgage rate gradually declining to 6% in 2023 and hitting the lows of 5.6% in 2024.
House Market Trends for 2024
Are you interested in buying or selling your home in 2024 instead?
It’s inevitable you’ll want to learn more about the future expectations and trends predicted by chief economists and the census bureau alike. There’s a lot that can impact the future outcomes within the context of the real estate industry — be it in Florida or New York.
For instance, rising mortgage rates, and interest rates may affect the buyer’s decision to purchase homes. While we saw more foreclosures in 2021 and 2022, this is less likely to be the case in 2024.
High building costs, wavering home values, and depreciation of long-term debt significantly affect the industry’s expectations. While it might be a little too early to provide a definitive outlook on 2024, if resources like Redfin, Realtor.com, and Zillow are any indication, the housing market may continue to slow down.
Real estate is an industry that is easily impacted by a number of external factors. As such, a lot can change (and rapidly) when one seemingly small aspect of its numerous external contributors takes a downturn. Still, it’s best to educate yourself so you have a keen sense of when to sell.
The Housing Market May Slow Down
Among the most significant expectations of the housing market is a slowdown, with prices either modestly declining or remaining flat for the year. According to the experts, 2024 may see a reduction in home market inventory and slowed down sales.
Also, factors like reduced demands, affordable issues, and increased interest rates may exert downward pressure on prices, pushing them down or creating a plateau.
Stability in the Housing Market
2024 is the perfect time to join the real estate industry, especially if you’ve been waiting for an ideal time to make a home purchase. Recent years have presented a cloud of uncertainty across the real estate industry.
However, experts predict 2024 to present a relatively stable housing market. Mortgage rates decreasing and declining demand may mean stability in pricing for sellers and buyers.
Housing Shortage
While several factors make 2024 a perfect buyer’s market, reports on the current housing market indicate that inventory shortage will remain a core problem until the end of the decade.
Considering housing demand estimates will continue to rise in opposition, it might not be long until national builders will need to satisfy the urgent need for more property.
Building Permits Will Plateau
According to industry-leading experts, building permits will decline in 2023, remain flat in 2024, and start rising steadily in Q1 2025.
Conclusion
Inflation hitting hard over the course of 2022 and 2023, tough economic times for many, and the end of the housing marketing craze have significantly impacted the real estate industry as we know it.
Due to the shift in housing demands, 2023 and 2024 might be a difficult times for sellers. We always recommend researching the current market trends, and assessing your motives for selling — or buying and renovating your property — to attract potential buyers.
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