Real Estate Market Recovery Expected in 2024
Quick Look
Redfin’s CEO, Glenn Kelman, predicts a housing market improvement in the next six months, following a low point in early 2024.
Despite positive forecasts, experts like Jeff Ostrowski from Bankrate.com highlight ongoing unpredictability in the housing market.
Average mortgage rates have slightly decreased to 6.99%, with potential further cuts by late 2024, though high prices may offset benefits.
National median home prices have risen 4.4% year-over-year, reaching $392,200, with expectations of continued growth due to limited inventory.
While some areas like Austin, Texas, saw price declines, 90% of markets experienced gains, reflecting regional disparities in market dynamics.
As the second half of 2024 approaches, industry leaders are expressing optimism about the housing market’s trajectory. Glenn Kelman, the chief executive of Redfin, recently shared that the housing market is expected to improve over the next six months. He suggested that the first quarter of 2024 marked the market’s lowest point. There are now signs of gradual recovery ahead. Various analysts echoed this sentiment. They also believe that the market has weathered its worst and is now on a path to steady improvement.
Experts Weigh In on Market’s Unpredictability
Despite some optimistic forecasts, there remains a degree of uncertainty. Jeff Ostrowski, a housing analyst at Bankrate.com, described the current market as “very strange” and challenging to predict. This uncertainty underscores the complexity of the housing market, influenced by a myriad of factors ranging from economic conditions to buyer behaviour. It highlights the unpredictable nature of real estate, where even seasoned experts can find it difficult to make definitive predictions.
Slight Decrease in Mortgage Rates to 6.99%
Mortgage rates have been a significant talking point, with recent trends showing a slight decrease. As of June 6, the average mortgage rate stood at 6.99%, down from 7.22% on May 20, according to Freddie Mac via the Federal Reserve. This decrease, albeit modest, has not yet sparked a rush among buyers, as noted by Orphe Divounguy, a senior economist at Zillow. He observed that the effect of high mortgage rates, which previously discouraged many buyers, appears to be diminishing. However, the market has not seen a significant increase in buyer competition despite the lower rates.
Moreover, there is potential for an interest rate cut by the fall of 2024. Jessica Lautz, the deputy chief economist at the National Association of Realtors (NAR), indicated that while mortgage rates might drop to around 6.5% by the fourth quarter, this might not translate to substantial relief for homebuyers due to the concurrent rise in home prices.
National Median Home Price Rises 4.4% to $392,200
The national median home sale price has increased by 4.4% year-over-year, reaching $392,200. This upward trend in real estate prices will likely continue, with some analysts forecasting another record high this summer. Jeff Ostrowski suggested that it is hard to envisage a scenario where prices would cool or decline on a national level. The sustained price growth is attributed to the limited housing inventory, which has kept demand high and competition fierce among buyers.
Home Prices in Austin Fall 2.9%, Other Cities Mixed
While the national outlook remains strong, regional variations tell a different story. For instance, some areas, such as Austin, Texas, have seen home-sale price declines of 2.9%. Similarly, other cities like San Antonio and Fort Worth have experienced smaller decreases of 1.2%. Portland, Oregon, also saw a slight dip of 0.9%. Conversely, major metropolitan areas that benefited from pandemic-era price growth have seen increases of up to 45%. This showcases the diverse dynamics across different regions.
Despite these regional fluctuations, the overall market conditions remain robust. According to the National Association of Realtors (NAR), 90% of markets have experienced price gains. Even in local markets where prices are softening, the majority continue to see home price growth. This suggests a resilient market overall.
Inventory Levels Up 35.5%, Listings Increase 2.1%
Inventory levels have shown significant changes. According to Realtor.com, there was a 35.5% increase in the available inventory of homes for sale for the week ending June 1, compared to a year ago. Additionally, newly listed homes on the real estate market saw a 2.1% increase from the previous year. This uptick in listings indicates that more homeowners are entering the market. This trend might be due to improved market conditions or personal circumstances that necessitate a move. Doug Duncan, the senior vice president and chief economist at Fannie Mae, noted that the rising number of listings suggests more current homeowners can no longer delay their plans to move.
Balancing Optimism and Caution in 2024 Market
As the real estate market navigates through 2024, a combination of optimism and caution defines the outlook. While some experts foresee continued improvement and stabilisation, others remain wary of the unpredictable elements that could influence market dynamics. The interplay of mortgage rates, home prices, and inventory levels will be crucial in shaping the market’s trajectory. With an anticipated interest rate cut and a potential stabilisation of prices, buyers and sellers alike should stay informed and be prepared for various scenarios. The housing market, with its complex and multifaceted nature, continues to be a significant area of interest and analysis for all stakeholders involved.
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