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2024 Is Looking Up

It’s Early Yet, but 2024
Could Be Just What the Doctor Ordered

What a difference a year makes. Rates are in the mid-6s. Inventory is creeping up. Home prices are stable. And early predictions suggest the Federal Reserve may cut interest rates, leading to an even greater decrease in mortgage rates. All this to say…the market is looking healthier, certainly more active, for everyone: buyers, sellers, and investors.

“A marked turn can be expected as mortgage rates have plunged in recent weeks.”
~Lawrence You, Chief Economist, NAR


Some Key Market Indicators 

Mortgage Rates Lead to Activity
Mortgage rates have come down over the past few weeks (except for last week, which saw a small uptick)—a trend that started right around the Christmas holidays. As a result, activity has increased, and the market dynamics have been positively impacted. To wit, buyers are poised.

The Fed Plans to Cut (We Think)
Predictions suggest the Federal Reserve may cut rates, potentially leading to a decrease in mortgage rates and an increase in buying activity. According to predictions from Goldman Sachs and echoed by experts like Mark Zandi, we might see several rate cuts in the coming months, which could cause a dramatic uptick in buying activity this spring and summer.


“We now forecast three consecutive 25bp cuts in March, May, and June to reset the policy rate from a level that Powell has recently taken to describing as ‘well into restrictive territory’ rather than just ‘restrictive'”.
~Goldman Sachs, December FOCM Recap


Inventory Is Trending Up
With the potential easing of mortgage rates, we may also see an increase in housing inventory. Currently, a significant portion of homeowners are ‘locked in’ with mortgage rates under 5%. As rates continue to decrease, we anticipate a gradual unlocking, leading to a significant increase in available inventory. 


78.7% of Mortgage Rates Less Than 5%
Current FHFA Loans with Mortgage Rate at Time of Origination

Source: FHFA


“Lock-In Rates” Limit New Inventory
Current FHFA Loans with Mortgage Rate at Time of Origination

Source: FHFA


Buyer Sentiment Is Key
This beleaguered segment is finally seeing some light at the end of the tunnel…that light being the welcoming glow of affordability. In the past year, high mortgage rates have paused some decisions. As rates stabilize and inventory increases, we expect buyer behavior to increase, bolstered by overall affordability and market accessibility. (Note: there continues to be a substantial portion of buyers purchasing with cash who still have the upper hand with sellers.)

Stability Is a Good Sign
Market equilibrium is returning after the past 12-18 months of instability and uncertainty. We’re seeing more stable home prices and a return to normal appreciation rates. Needless to say, this shift toward stability is crucial for a healthy real estate environment. A steady appreciation rate is also expected, contributing to predictability and sustainability for buyers and sellers.


The Big Takeaway 

For Buyers
The expected decrease in mortgage rates and increase in inventory could make 2024 a favorable year for purchasing homes. Improved affordability and market accessibility might present more opportunities for buyers, especially those who were previously hesitant due to high rates.

For Sellers
The potential increase in inventory suggests a more balanced market. Sellers who were reluctant to list their properties due to high mortgage rates might find 2024 more conducive to selling. Stable home prices and normal appreciation rates could also provide a predictable environment for sellers.

For Investors
The anticipated market dynamics, including softer mortgage rates and a balanced inventory, could present lucrative opportunities. Investors might find more options for property acquisition, and the return to normal appreciation rates suggests a sustainable environment for long-term investments.

Balance Is the Operative Word in 2024

I would be remiss not to fire a warning shot, namely that as we navigate through the coming year, it’s important to approach these (and any) market shifts with a balanced and informed perspective. There’s a lot to be said for patience. However, when the moment (er…house, condo, villa, residence, etc.) presents itself, it’s important to act. The only way to effectively manage the ups and downs of the market is to stay in the know—remain objective, watch the numbers, look for trends, and stay in touch with a qualified agent who truly has your best interest in mind. Providing accurate, timely information remains my top priority, ensuring you can make a well-informed decision that is the right move for you.

Be well,

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