The 2023 Recap: A Tough Year for Homebuyers

Last year, aspiring homeowners faced a tough market. Mortgage rates peaked at a staggering 7.79% in October, while median home prices soared above $400,000. The financial burden on buyers was palpable, with average monthly payments reaching an unprecedented $2,306.

Introduction

2024: A Silver Lining on the Horizon?

The upcoming year offers a mixed bag. Home prices are expected to stay high, and in some areas, even climb further. However, there’s a glimmer of hope as some markets might see a softening in prices. Economic optimism stems from the Federal Reserve’s pause in rate hikes, potentially stabilizing mortgage rates.

The Persistent Affordability Challenge

Despite these developments, affordability remains a hurdle. High demand and low inventory continue to drive prices up. Mark Fleming of First American Financial Corporation describes 2024 as a “flat stretch” for the housing market, suggesting a period of stabilization rather than significant change.

“For home buyers who are taking on a mortgage to pur­chase a home and have been wary of the autumn rise in mortgage rates, the market is turning more favorable, and  there should be optimism entering 2024 for a better market.”
Jessica Lautz, Deputy Chief Economist at the National As­sociation of Realtors (NAR)

Housing Market Recovery: A Gradual Process

Experts, including Keith Gumbinger from HSH.com, believe that an increase in housing inventory is crucial for market recovery. This, coupled with a gradual decrease in interest rates, could improve buyer opportunities without triggering a sudden demand surge.

Mortgage Originations: A Slow Uptick

The Mortgage Bankers Association (MBA) predicts a rise in mortgage origination volume, anticipating a gradual decline in rates to around 6% by year-end. Fannie Mae echoes this sentiment, expecting a modest recovery in mortgage activities.

Housing Inventory in 2024: A Tight Squeeze

Housing inventory remains constrained, with Rick Sharga of CJ Patrick Company not expecting significant changes in 2024. New constructions show some promise, but overall, the market is still grappling with limited supply, especially for entry-level homes.

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Existing-Home Sales: A Flicker of Hope

After a period of decline, existing home sales saw a slight uptick in November 2023. This could signal the beginning of a gradual market turnaround, with Dr. Lisa Sturtevant of BrightMLS forecasting a rise in existing home sales and a modest increase in inventory by the end of 2024.

The Affordability Dilemma Continues

Despite potential market improvements, home affordability remains a significant challenge. High home prices, combined with above-average mortgage rates, continue to sideline many potential buyers, particularly first-timers.

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Will the Housing Market Crash in 2024?

While some regions might experience price declines, a full-blown housing market crash seems unlikely. Homeowners today generally have more equity and financial stability compared to the 2008 crisis, reducing the risk of a crash.

Foreclosures in 2024: An Incremental Increase

Foreclosure activity is expected to rise but remain below pre-pandemic levels. This increase is attributed to a combination of factors, including the gradual normalization of the market and economic conditions.

To Buy or Not to Buy in 2024?

The decision to buy a home remains highly personal and dependent on individual financial circumstances. Experts like Orphe Divounguy from Zillow Home Loans emphasize the importance of buying when it’s right for you, rather than trying to time the market.

Expert Tips for Buyers and Sellers in 2024

For buyers, it’s advised to move to lower-priced markets if possible, get finances in order, and stay informed about market trends. Sellers should focus on the right pricing, enhancing their home’s appeal, and leveraging online tools to attract buyers.