Real Estate market outlooks in the beginning of 2024

Real Estate Market Outlooks in the beginning of 2024

We are just about 6 weeks or so into the new year and the economy is a big topic. So, what are the Real Estate market outlooks in the beginning of 2024, so far? There are bad. But first, I should probably lay a foundation for you, by stating that I have worked in the Real Estate Industry for 25+ years now. I have never been a realtor or a lender. Therefore, I am not going to sell you a home or want to lend you money for a home. I have worked in the legal side and title and escrow side of the real estate industry.

Cycles in the Real Estate market

Having said that I have seen cycles over the years. The cycles do repeat themselves and probably will continue to do so. The mortgage crisis was not a cycle. It was an unprecedented failure and one I hope to never see again. The foreclosures were heartbreaking and the numbers were shocking. The good news in the Real Estate world is always a happy thing and it trickles down to many other industries.

Encouraging signs so far in 2024

There are some encouraging signs in the Housing Market and many more positive signs than we have seen in a while. The housing market usually bodes well in the spring, but this spring season it is looking even greener.  A recent report from Redfin said, “2024 is shaping up to be more active than 2023 for homebuyers and sellers, with mortgage applications and new listings rising.” Borrowing costs have fallen from nearly 8% for the 30-year fixed in mid-fall 2023 to the current mid-6% range. That is not to say that they are completely stable just yet.  My weekly rate downloads are still fluctuating by not as much as they were previously. 

Housing Market for the typical homeowner

 For the typical U.S. homebuyer, monthly payments have fallen to $2,456 recently down from October’s record high of over $2,700. Also, new listings are up 8% year-over-year for the week ended January 14th all over the U.S.  That is great news for the homeowner and buyer. However, this doesn’t take into account that taxes on homeownership in the US have gone up on average 4%. Still, so has rent for non-homeowners in relation to those tax increases.

Fannie Mae’s predictions

There is good news, coming from Fannie Mae stating, “Mortgage Rates Expected to Dip Below 6% in 2024, Boosting Home Sales.” Fannie is expecting the housing market to begin a gradual return to a more normal balance in 2024. Home prices are also expected to increase by 3.2% over the year, compared to frothy 7.1% in 2023. New home sales are expected to increase along with existing home sales – moving up to 4.5 million units by Q4 2024, compared to 3.8 million in Q4 2023. Fannie Mae forecasts that the 30-year fixed rate mortgage will fall below 6% by the end of 2024. And that homebuilders will continue to add new supply – both of which should aid affordability.

Supply prices

Supplies for building have also seen a drop in prices, so far in 2024.  Most markets have seen a 5% decrease in building materials and it is predicted that we will see almost 10% by the end of the first quarter.  I saw a bid for $800,000 last July that now was re-bid for $40,000.00 less just last week.  That can make a big difference for people looking to build a home.  Even for the homeowner who wishes to renovate or add on to their existing home.

Some Real Estate Markets aren’t as bright

Some areas may have more home listings on the market or even worse home prices are falling.  Boise, Idaho was nearly 7.8% the highest in the nation.  Austin, Texas was No. 2 with nearly the same percentage. Chicago Il had a 1.1% drop, which I feel is not even a drop.  You are not going to feel that in your pocketbook if you need to sell.  The above 3% drop is where you are hurting.  

If you live in one of the areas to see the highest drops, hold it may turn around. However, if your area grew significantly in home value as it did in Boise, Idaho.  Salt Lake City Utah did grow as much as Boise and Austin did as far as home value, but it is still over 5% in home value drop. All markets can be different. Everything in the overall numbers is an average all over the US.

What does that mean for the Real Estate Market?

What does all this mean?  It means if the rates drop below 6% and building costs remain where they are predicted to be at the end of March.  Sellers may decide it is time to build new.  Their current homes are remaining at a desirable selling price.  New Homebuyers will have more homes to choose from and an affordable mortgage. Refinances may increase with the rates drop. Home Equity loans may increase.

Refinancing

I have always been told that you need to remain in your home for 4 to 5 years to make the costs of refinancing your home worth it.  Also, 4 to 5 years between refinancing unless you need a lower mortgage by re-amortizing or your costs are lower (such as no appraisal, lower origination fees, etc,) Because it takes time to recoup paying for those closing costs, lenders fees, appraisal fees, etc. Those fees can be added to your loan in some cases and then spread out over 30 years. But you are still paying for them. That is something that you will need to consider if you are going to refinance.

Real Estate Market so far in 2024

All the positive signs we are seeing in the Real Estate world, if they continue, should increase money flow throughout the US.  Now, if we could only keep the rising cost of everything else in check.  It could be a great start to a wonderful 2024.


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