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Answering all those burning questions you didn’t know you had about home ownership.

2024 Housing Market Predictions

Picture of Jessica Dabkowski

Jessica Dabkowski

Helping you with all things homeownership!

It’s almost February, friends. I suppose we had better have a chat about the 2024 housing market predictions.

It does feel like the market is waking up from a long sleep. I have not one, but two sets of buyer clients looking for something very specific. I’m hopeful the spring market is going to flush out some candidates for their dream homes.

Disclaimer: I do not have a crystal ball. This article is intended to educate, but please do your own research into your personal situation on how the data I present below may apply to you.

2023 Recap

Let’s recap 2023: the market was in the shitter.  I don’t usually curse on the blog, but there you go. 

No, seriously, the market wreaked some of havoc in 2023.  This applied to the industry in general, as well as my personal experience.  The high interest rates put the market into grid lock as affordability and inventory took a nose dive. Potential sellers couldn’t stomach giving up their low interest rates and opted to stay put.

The interest rates climbed from around 6.5% to over 8% over the course of the year.  In December 2023, the industry breathed a sigh of relief as the Fed signaled it was satisfied with the progress battling inflation and called for three rate cuts in 2024.  We saw rates sink back into the high six percent range heading into 2024.

Present Day

In January 2024, the rates have been hovering between 6.7-6.9%, which sounds a whole lot better than the 8% we were seeing in the fall.  

From everything I have read, the economists seem optimistic that the Fed is done with rate hikes for the immediate future and will be looking to the rate cuts called for last year.

While this optimism is present in the “vibes” of the market, we don’t quite have the data to determine what is actually happening.  Firstly, because data is usually reviewed and aggregated on a month-to-month basis. The data reports are 2-6 weeks old when they are released. Second, we have to consider the impact of the holiday and winter seasonality of the market.  It’s fairly typical for sales to slow during this time just based on human nature.

2024 Rate Predictions 

Rate predictions from around the internet:

Business Insider: fall to between 5.8 and 6.1%

Forbes: fall to 6.5% by end of 2024

homebuyer.com: 4.25% by the summer

Fannie Mae: 5.8% by end of 2024, 5.5% by end of 2025

Wells Fargo: 6.05% by end of 2024, 5.7% by end of 2025

National Associations of Realtors: 6.3% by end of 2024

Giant Koolaid pitcher busting through a yellow wall yelling "Oh Yeah"
You better fix that wall before my Dad gets home. -D. Cook

I’m not sure what kind of Kool-Aid homebuyer.com is drinking, but I want in on that juice. 

Of note, most of these sources are calling for a gradual decrease in rates over the course of the year; not steep declines.

Our takeaways with the interest rates are threefold. One, lower interest rates will hopefully open up the inventory. Two, those of you who bought with interests rates in the 7s need to be vigilant this year as you may wish to refinance to bring down your mortgage interest rate.  Third interest rates are unlikely to drop into the pandemic lows anytime in the near future.

2024 Housing Predictions

As we get into 2024, I do believe we’re going to see a bit more of a stratified market, in terms of geography.  Some areas may remain hot, but many will start (or, in some cases, continue) to cool. 

Map highlighting Canton, Plymouth, Northville, Novi, Livonia and Westland MI
My version of the I-275 Corridor

If you read this article, we know that locally many of our markets remained relatively hot compared to the rest of the nation. Homes in that I-275 corridor sold faster and with higher month-over-month price increases than the median home in the national statistics last year.

Home Prices 

Both Zillow and Redfin call for mostly flat housing prices in 2024. Technically, they are decreases but at 1% or less, but that seems practically within the margin of error. I deem those predictions to be flat.  

Queen Elizabeth knighting someone
I deem the pricing predictions “flat”.

The good news for buyers is they aren’t predicting prices will go up!  On the flip side, it’s not inducing sellers to list their homes for sale to cash in on higher prices.  

Regardless of what Zillow and Redfin call for at the national level, housing activity is localized. It’s important to know your market and find an agent who also studies the data closely. (Ahem, ahem.)

Inventory will Loosen Up, Slightly

Sellers can’t wait forever.  Retirees want to follow the sunshine.  That third baby is making your three-bedroom too tight. Sellers who were willing to wait out 2023 may not be willing to wait another year until the interest rates potentially drop into the 5%-range.

Interestingly, the typical home in the U.S. is near 40 years old. Many (most?) of these homes are in need of investment in terms of updating rooms such as kitchens and baths. May some of these owners choose to relocate rather than suffer the pain of a renovation?

Beyond sellers with existing homes, new home construction continues to make gains.  With the low existing home inventory, new construction has increased to makeup almost one-third of single family inventory.

Other factors

Another factor in play? Climate change. There’s some interesting predictions around parts of coastal Florida experiencing price falls and owners leaving the area due to the cost of home insurance.  Some Floridians experienced increases of up to 40% in their policy cost. What unmitigated natural disasters will we experience this year? How will this impact the decisions of those owners?

There’s also return to the office. You all may remember I’m a Reddit fan (as evidenced in this article), and there is a lot, and I mean A LOT, of chatter around employers mandating employees return to the office. This mandate looks different depending on the employer, but the bottom-line remains the same: when an employee has to make a commute into the office, it changes the dynamic of where the employee can live.  Some employees are finding out they bought too far away from the office or they need to sell to move back to where the employer is based.

Additionally, the HELPER Act, currently working its way through Congress, provides for a 100% mortgage for teachers and first responders.  As written in its current state, it would exempt qualified first-time home buyers from down payment and mortgage insurance requirements. It basically takes the existing FHA loan and modifies it for qualified individuals. There are a lot of teachers and first responders out there who would benefit from this type of program.  That being said, in competitive bidding situations, sellers often choose cash or conventional offers over an FHA loan based on the additional requirements imposed on the loan by the FHA.  

Thanks for joining me this week for the 2024 housing market predictions. As always, I’m here to help with all your homeownership needs!

Photo by cottonbro studio

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