Top 10 Predictions for 2024
Source: Matthew Gardner, Former Windermere Chier Economist
Sales will increase but remain the lowest in 15 years. 2023 had lowest number of sales since the housing bubble burst in 2008. Expect available inventory to improve modestly in 2024 which, combined with mortgage rates trending lower, should result in about 4.4 million home sales. With demand still exceeding supply, sellers will still have the upper hand.
Foreclosure activity won’t impact the market. Many expected that the end of forbearance would bring a crush of homes to market, but that didn’t happen. Fewer than 1% of homes are in the forbearance program. While foreclosure starts have picked up, they remain well below pre-pandemic levels and should return to the long-term average.
Government needs to continue taking housing and affordability seriously. Several states have adopted new land use policies aimed at releasing developable land. In 2024, cities and counties will need to continue to put in ease restrictive land use policies, streamline the permitting process, and reduce builder fees in order to drive affordability.
Housing affordability will get worse. With home prices continuing to rise and the pace of borrowing costs far exceeding income growth, affordability will likely erode further in 2024. First-time home buyers will be the hardest hit by this continued lack of affordable housing.
New construction will gain market share. Although new construction remains slow, builders are benefiting from the lack of supply in the resale market and softening material costs. However, they cannot be counted on to deliver enough new homes to meet the demand.
Home values in markets that crashed will recover. Some markets where home prices increased sharply during the pandemic experienced post-pandemic price declines. These markets have started to recover more quickly than expected. In 2024, prices should match or exceed their 2022 highs in the vast majority of metro areas across the country.
Home prices will rise, but not much. In 2023, lack of inventory propped up prices and, while there will be an increase in the number of homes for sale, it won’t be significant. Expect growth to be around 1%, which is the lowest pace in many years.
Listing activity will rise modestly. With 80% of mortgaged homeowners in the U.S. having rates at or below 5%, there’s been little motivation to sell. When rates fall by an additional 1.5%, some will be motivated to move.
Mortgage rates will drop, but not quickly. With inflation and the broader economy starting to slow, mortgage rates should ease in 2024. Look for rates around 6% by year-end.
No housing bubble in 2024. Last year, there were predictions of a housing bubble, but the market performed better than expected. No bubble predicted for 2024, either!
Mark & Mollie Huppert
Mollie Cell: 206-399-2830
Mark Cell: 425-248-9467
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