The 2024 housing market is shaping up to be an interesting one, with shifting dynamics that present opportunities and challenges for both buyers and sellers. As we enter the new year, experts predict we may see a transition from a sellers’ market to a more balanced market in many parts of the country. However, local conditions will continue to play a major role in determining whether it is a buyers’ or sellers’ market in specific areas.
In this comprehensive guide, we will explore the key real estate trends, forecasts, and insights you need to navigate the 2024 housing market successfully.
Overview of the 2024 Housing Market Outlook
After two years of soaring home prices and ultra-competitive bidding wars in a red-hot sellers’ market, the housing market is showing signs of cooling down as we enter 2024. This slowdown is largely driven by higher mortgage interest rates, which have reduced buyer demand and housing affordability.
The 30-year fixed mortgage rate peaked above 7% in late 2022 but has since moderated to around 6.5% as of January 2023. While still high historically, this downward trend in rates could continue into 2024 if inflation keeps slowing. Lower rates would provide some relief for buyers, potentially stimulating demand.
However, with economic uncertainty on the horizon, a recession could further dampen the real estate market. Overall, experts predict more balanced conditions in 2024 as buyers regain some leverage and the market shifts away from the frenzied pace of the past two years.
According to the National Association of Realtors’ 2023-2024 Housing Forecast, existing home sales are projected to decline 17.2% in 2023 before stabilizing in 2024. Home prices are expected to grow at a more moderate pace of 1.2% in 2024. More inventory coming onto the market as sellers list their homes will also provide buyers with expanded options.
Key Real Estate Market Trends for 2024
Several key trends will shape the housing market landscape in 2024. Here are some of the top forecasts:
1. Rising Inventory Levels
The historically tight inventory that has plagued buyers is expected to improve somewhat in 2024 as more sellers list their properties. Homeowners who locked in lower mortgage rates may feel comfortable moving as rates moderate. The inventory crunch will likely persist but should begin easing gradually, providing more selection for buyers.
2. Slowing Price Growth
After rapid home price appreciation in 2021 and 2022, price growth is forecast to slow to more moderate single-digit levels in 2024. Affordability constraints for buyers and economic uncertainty will contribute to more modest gains. However, prices are not expected to decline nationally as demand still outpaces supply.
3. Regional Variations
While the national housing market is projected to become more balanced, local market conditions can vary significantly. Some more expensive coastal markets may see price declines, while many affordable Southeast and Midwest markets will remain competitive. Trends will differ based on local economic factors.
4. Changing Demographics
The pandemic housing boom was largely driven by millennials looking to become homeowners. In 2024, demographic factors will further influence housing demand as more Gen Zers enter their prime homebuying years and baby boomers downsize.
5. Impact of Remote Work
Remote and hybrid work policies adopted during the pandemic will continue to allow flexibility in 2024. This may prolong the trend of buyers relocating from expensive cities to more affordable secondary markets with lower costs of living.
6. Micro Markets Emerge
Real estate is becoming more localized, with demand differing even between neighborhoods in the same metro area. Hyperlocal market trends will emerge related to amenities, school districts, commutes, and other lifestyle factors.
7. Green Home Features
Energy efficiency, solar power, electric vehicle charging, and other sustainable home features will be increasingly in demand from buyers in 2024. Eco-conscious consumers and government incentives are driving the green housing trend.
8. iBuying Expansion
Companies like Zillow, Opendoor, and Offerpad, which make instant cash offers to purchase homes, are expanding into new markets. iBuyers saw slowing growth in 2022 but may play a bigger role in 2024 as seller convenience appeals to aging baby boomers.
9. Build-to-Rent Growth
With rents rising, institutional investors are putting more capital into building single-family rental communities. While still a small segment, build-to-rent development is growing as an alternative to traditional home ownership.
How Rising Mortgage Rates Are Impacting the 2024 Market
One of the most significant factors shaping the 2024 real estate market outlook is the dramatic rise in mortgage rates over the past year. In early January 2022, the average 30-year fixed rate mortgage was just 3.22%. By late October 2022, it had shot up to a 20-year high of 7.08% before retreating slightly.
These higher borrowing costs have put a damper on demand and caused housing affordability to plummet. According to the National Association of Realtors (NAR), the monthly mortgage payment on a median-priced home has risen by more than 50% over the last two years.
With mortgage rates projected to remain relatively elevated compared to the historic lows seen during the pandemic, they will continue to be a headwind for the 2024 housing market. However, NAR Chief Economist Lawrence Yun predicts 30-year rates will likely trend back down to around 5% by the end of 2024 as inflationary pressure eases.
Higher rates are pricing out some first-time homebuyers and causing trade-down buyers to remain on the sidelines. But move-up buyers may benefit from rising rates, giving them leverage to negotiate deals in a less frenzied market.
Overall, expect higher mortgage rates to cool demand, slow home price growth, and provide greater balance between buyers and sellers in 2024. But demographics and tight inventory will prevent more dramatic market corrections in most areas.
Will 2024 Be a Buyers’ or Sellers’ Market?
Whether 2024 shapes up to be more of a buyers’ or sellers’ market depends heavily on location as well as global economic conditions. Many experts predict we will see a gradual shift over the course of 2024 from the seller-favored market of the past two years to a more balanced, neutral market by the end of the year.
Rising mortgage rates in 2022 have already started reducing buyer competition and giving sellers less leverage to demand over-asking offers. If rates moderate as projected in 2024 and more sellers list homes, buyers will gradually regain negotiating power.
However, the persistent inventory shortage and demographic tailwinds will prevent a major buyers’ market from emerging nationally. Pockets of stronger demand in affordable regions could still experience bidding wars. But overall, buyers will likely face less pressure, more choices, and smaller price premiums.
Lee Menifee, Head of Originations at Planet Home Lending, summarizes the 2024 outlook: “I expect 2024 to level the playing field between buyers and sellers. The last two years have been a frenzy with buyers waiving inspections, paying over asking price and giving up other protections just to win a home. As housing supply improves and buyers regain patience, we’ll see more balance.”
Many individual local markets will still tilt strongly in one direction or the other, depending on the dynamics of supply and demand. Be sure to consult local real estate professionals to understand whether your specific area leans toward a buyers’ or sellers’ market.
How to Prepare for Buying or Selling in the 2024 Market
Navigating the real estate market in 2024 will require understanding the evolving trends at national and local levels. Here are some tips on how buyers and sellers can best prepare for the year ahead:
For Home Buyers:
- Monitor mortgage rates and stay in touch with lenders to act when rates drop to maximize affordability.
- Be ready to move quickly on homes that meet your criteria – desirable listings may still sell rapidly.
- Focus your search in more buyer-friendly locations with higher inventory and less competition from investors.
- Emphasize affordability – seeking lower prices or smaller homes can improve your budget flexibility.
- Don’t waive inspections unless necessary – leverage your stronger position to protect your investment.
For Home Sellers:
- List at an attractive but realistic price point, informed by recent comparable sales and local trends.
- Prepare your home to make the best first impression through renovations, staging, and needed repairs.
- Consider having an appraisal done upfront to confirm your home’s current valuation.
- Highlight upgrades and sustainability features that today’s buyers are seeking.
- Weigh the costs and benefits that iBuyer offers as an alternative to the traditional market.
2024 Real Estate Market Forecast: Key Takeaways
- The 2024 housing market is expected to cool from the frenzied pandemic years and become more balanced between buyers and sellers.
- Mortgage rates will remain relatively high but could start to moderate, which would strengthen buyer demand.
- Home price growth will decelerate but remain positive in most areas due to low inventory levels.
- With more new listings, buyers will see less competition from investors and have expanded options to choose from.
- Local market conditions will continue to vary, with regional economies, demographics and supply dynamics creating a mixed picture.
- Overall, 2024 is setting up to offer a welcome change after the ultra-competitive 2021-2022 market, with more room for negotiation.
To Recap: A Shifting Real Estate Landscape in 2024
The housing market is always evolving, and as we enter 2024, the dynamics are changing once again. After the wild seller’s market of recent years, rising rates and moderating demand are restoring more balance between buyers and sellers nationally.
However, local market conditions and economic trends will continue to create a complex mix of factors influencing real estate in the year ahead. Staying flexible and informed on both macro conditions and micro-market nuances will help buyers and sellers adapt for success.
With more inventory coming online, buyers should see less intense competition. Sellers will need to price appropriately and ensure their home shows well to attract buyers who now have more choices. Investing the time and resources into understanding your local real estate arena in 2024 will pay dividends.
While uncertainty remains, the overall outlook is for a healthier and more sustainable housing market in 2024. By making savvy moves based on interest rates, prices, inventory levels, and neighborhood demand, both buyers and sellers can prosper in the year ahead.
Frequently Asked Questions about the 2024 Real Estate Market
Q: Will home prices decline in 2024?
A: Nationally, home prices are not projected to see large declines in 2024, as demand is expected to remain relatively strong. However, some expensive markets could potentially see small dips. Overall, experts forecast a cooldown from rapid growth to the mid-single digit range.
Q: Is 2024 a good time to buy a house?
A: The moderating market conditions anticipated in 2024 could provide a favorable climate for buyers who are priced out when competition is extremely high. With more options and negotiating power, 2024 will likely be a good time to buy for those who are financially ready.
Q: When will the housing market crash?
A: There is no strong indication of an imminent housing market crash nationally, though projections can change based on economic conditions. The market is rebalancing from an overheated state but remains supported by demand fundamentals.
Q: Will mortgage rates go down in 2024?
A: Economists expect mortgage rates to decrease modestly from 2022 highs as inflation cools, potentially averaging around 5% by the end of 2024. However, rates should remain well above the 3-4% levels seen before the pandemic.
Q: How quickly will home prices rise in 2024?
A: The pace of home price appreciation is forecast to slow significantly in 2024, with projections around 5-6% growth for the national median price. This deceleration follows price gains of over 15% annually in 2021-2022.
Q: Will iBuyers have an impact on the 2024 housing market?
A: iBuyer companies like Zillow, Opendoor, and Offerpad are expanding their real estate services into more markets. While still a small share of sales, iBuyers could have a growing influence by adding liquidity and convenience.
Q: Will it be easier to find a house in 2024?
A: As sellers list homes delayed from prior years, buyers should gradually see more options and less need for bidding wars in 2024. However, the inventory shortage will still make finding the right home challenging compared to pre-pandemic years.
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