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Prospects for the spring market look a bit brighter as January numbers show an increase in both the pace of existing home sales and the size of the unsold inventory. The National Association of Realtors® (NAR) said sales of pre-owned single-family houses, townhomes, condominiums, and cooperative apartments were at a seasonally adjusted annual rate of 4.00 million. This was an increase of 3.1 percent from the December rate of 3.88 million and was 1.7 percent below the pace in January 2023. December sales figures were also revised slightly higher, cutting the previously reported year-over-year decline nearly in half to -3.7 percent.
Single-family home sales rose from 3.48 million in December to 3.6 million, a gain of 3.4 percent, and remained lower year-over-year by 1.4 percent. Condo sales were flat at an annual rate of 400,000 and were 4.8 percent lower than one year earlier.
Existing home sales beat analysts’ expectations, but not by much. The consensus forecast from Econoday was 3.97 million.
“While home sales remain sizably lower than a couple of years ago, January’s monthly gain is the start of more supply and demand,” said NAR Chief Economist Lawrence Yun. “Listings were modestly higher, and home buyers are taking advantage of lower mortgage rates compared to late last year.”
Those listings did expand in January, up 2.0 percent to 1.01 million units. This is estimated to be a 3.0-month supply at the current rate of sales, but that estimate is virtually unchanged from that in both December and January 2023. Properties typically remained on the market for 36 days in January, up from 29 days in December and 33 days in January 2023.
NAR’s current president Kevin Sears said the association has been pushing Congress to pass H.R. 1321, The More Homes on the Market Act. The bill would lower taxes on home sales and hopefully bring additional inventory to the market. “More listings will help Americans move,” Sears said.
Home prices continued to rise, posting the seventh consecutive month of annual price gains. The median for all residential sales climbed 5.1 percent to $379,100. The median single-family home price was up 5.0 percent to $383,500 while condo prices appreciated 5.7 percent to $321,100.
The median home price reached an all-time high for the month of January,” Yun said. “Multiple offers are common on mid-priced homes, and many homes were still sold within a month. The elevated share of cash deals – 32 percent – indicated a market full of multiple offers and propelled by record-high housing wealth.”
First-time buyers were responsible for 28 percent of January sales and individual investors and second-home buyers accounted for 17 percent. Only 2.0 percent of sales were considered to be distressed.
All four major regions posted annual price increases but only one saw annual growth in sales. In the Northeast the sales rate of 480,000 units was unchanged from December but 5.9 percent lower than in January 2023. Median prices jumped 10.1 percent to $434.300.
A 2.2 percent increase brought Midwest sales to an annual rate of 950,000 in January, down 3.1 percent for the year. The median price was $271,700, up 7.6 percent from January 2023.
Existing home sales in the South rose 4.0 percent from December to an annual rate of 1.84 million, closing to within 1.6 percent of sales 12 months earlier. Median prices were up 4.1 percent to $345,100.
Sales in the West rose 4.3 percent compared to December to 730,000 annual units, 2.8 percent higher than the prior January. The median price in the region gained 6.3 percent to $572,100.
Source: mortgagenewsdaily.com
Mortgage rates rose for all types of loans compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans moved higher.
Mortgage rates could gradually come down this year, according to Greg McBride, CFA, Bankrate chief financial analyst. As the Federal Reserve stopped raising rates in 2023, mortgages rates started to drop at the end of Q4. At its Jan. 31 meeting, the central bank announced it would hold off changing rates and pointed to three rate cuts this year. Rate hikes and cuts affect many areas of the economy, including the 10-year Treasury, a key benchmark for fixed-rate mortgages.
“The 10-year Treasury yield that serves as a baseline for fixed mortgage rates will have a bouncy journey lower, moving back above 4 percent early in 2024 but trending lower as inflation cools and the Fed gets closer to cutting rates,” says McBride. “For mortgage rates, that portends a general downtrend — albeit with fits and starts — in 2024.”
Rates as of February 14, 2024.
The rates listed above are averages based on the assumptions here. Actual rates available within the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Wednesday, February 14th, 2024 at 7:30 a.m.
The average rate for a 30-year fixed mortgage for today is 7.25 percent, up 15 basis points over the last week. Last month on the 14th, the average rate on a 30-year fixed mortgage was lower, at 7.01 percent.
At the current average rate, you’ll pay principal and interest of $682.18 for every $100,000 you borrow. That’s an additional $10.15 per $100,000 compared to last week.
The 30-year mortgage is the most popular option for borrowers. It has a number of advantages. Among them:
The average rate for the benchmark 15-year fixed mortgage is 6.61 percent, up 13 basis points from a week ago.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $877 per $100,000 borrowed. The bigger payment may be a little tougher to find room for in your monthly budget than a 30-year mortgage payment, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much faster.
The average rate on a 5/1 ARM is 6.14 percent, rising 3 basis points over the last week.
Adjustable-rate mortgages, or ARMs, are mortgage terms that come with a floating interest rate. To put it another way, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These types of loans are best for those who expect to refinance or sell before the first or second adjustment. Rates could be considerably higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 6.14 percent would cost about $609 for each $100,000 borrowed over the initial five years, but could ratchet higher by hundreds of dollars afterward, depending on the loan’s terms.
The average rate you’ll pay for a jumbo mortgage is 7.32 percent, up 16 basis points over the last week. This time a month ago, the average rate for jumbo mortgages was lesser at 7.06 percent.
At the current average rate, you’ll pay a combined $686.93 per month in principal and interest for every $100,000 you borrow. That’s up $10.85 from what it would have been last week.
The average 30-year fixed-refinance rate is 7.28 percent, up 9 basis points from a week ago. A month ago, the average rate on a 30-year fixed refinance was lower at 7.22 percent.
At the current average rate, you’ll pay $684.21 per month in principal and interest for every $100,000 you borrow. Compared with last week, that’s $6.10 higher.
At its meeting concluding Jan. 31, the Federal Reserve announced it was maintaining its current rate due to a resilient economy and strong jobs numbers. Policymakers also signaled the potential for three rate cuts in 2024.
“Inflation is coming down faster than has been expected but that will need to be sustained before the Fed feels comfortable cutting short-term interest rates,” says McBride. “Easing inflation pressures will help mortgage rates now, no waiting.”
Still, don’t expect rates to change drastically anytime soon.
“The budget deficit remains high, and the various inflation metrics remain above the comfort level,” says Lawrence Yun, Chief Economist with the National Association of Realtors. “That means the mortgage rates will likely be in the 6 percent to 7 percent range for most of the year.”At its meeting concluding Jan. 31, the Federal Reserve announced it was maintaining its current rate due to a resilient economy and strong jobs numbers. Policymakers also signaled the potential for three rate cuts in 2024.
“Inflation is coming down faster than has been expected but that will need to be sustained before the Fed feels comfortable cutting short-term interest rates,” says McBride. “Easing inflation pressures will help mortgage rates now, no waiting.”
Still, don’t count on mortgage rates plummeting in the near future.
“The budget deficit remains high, and the various inflation metrics remain above the comfort level,” says Lawrence Yun, Chief Economist with the National Association of Realtors. “That means the mortgage rates will likely be in the 6 percent to 7 percent range for most of the year.”
The rates on 30-year mortgages mostly follow the 10-year Treasury, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves. These broader factors influence overall rate movement. The specific rate you’d qualify for is tied to your credit score, loan type and other variables.
While mortgage rates change daily, it’s unlikely we’ll see rates back at 3 percent anytime soon. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than anticipated, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
To help you uncover the best deal, get at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.
Source: bankrate.com
Many Americans expect mortgage rates to decline over the coming months but they remain pessimistic about how affordable buying a home will be in 2024, a survey by Fannie Mae shows.
The Fannie Mae Home Purchase Sentiment Index jumped by 3.5 points last month to nearly 71, its highest level since March 2022. This increased confidence was built on people feeling more secure in their jobs and those who believe the cost of a home is likely to decline this year, the index showed.
But the survey also revealed a fault line that is currently shaping the housing market— despite rates falling from their two-decade highs in the fall of last year, affordability still remains a concern for potential buyers. The Fannie Mae survey showed that a mere 17 percent of respondents said that now is a good time to purchase a property.
An all-time survey-high 36 percent of respondents indicated that they expect mortgage rates to go down in the next 12 months, while 28 percent expected them to go up, and 35 percent expected rates to remain the same.
“For the first time in our National Housing Survey’s history, a greater share of consumers believe mortgage rates will decrease over the next year, rather than increase,” Doug Duncan, Fannie Mae’s chief economist, said in a note. “Consumers also expressed greater confidence in their job situations this month, another sign that housing sentiment may continue to improve in 2024.”
But those consumers were also worried about whether they will be able to buy even as mortgage rates drop.
“While home affordability may improve if actual mortgage rates continue moving downward, other parts of the affordability equation have yet to ease or improve for consumers,” Duncan said. “A large majority still think home prices will either increase or stay the same; the ‘good time to buy’ component continues to hover near its historical low.”
Mortgage rates hit 8 percent in October 2023, making securing a home loan the most expensive it has been since the turn of the century. Since then, rates have declined to the mid-6 percent range, a development that has sparked some activity among buyers.
This jump in interest has yet to translate into a selling spree, partly due to elevated prices.
On Thursday, the National Association of Realtors (NAR) pointed out that the median single-family used home price jumped 3.5 percent from a year ago to $391,700. Meanwhile, the payments that American households would pay on their mortgages if they put down 20 percent of a loan was 10 percent higher than a year ago at about $2,200.
“Many homebuyers have been shocked at high housing costs, with a typical monthly mortgage payment rising from $1,000 three years ago to more than $2,000 last year,” Lawrence Yun, NAR’s chief economist, said in a statement shared with Newsweek.
The rise in prices is partly due to a lack of enough supply of homes available for sale. This was a particular challenge in the used homes market, where sellers who own mortgages in the 2 to 3 percent range are reluctant to give them up with current costs of home loans high.
“While a lower mortgage rate path supports our forecast for a gradual increase in housing demand and sales activity in 2024, until we see a meaningful increase in housing supply, we expect affordability will remain a significant barrier to home ownership for many households,” Duncan said.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Source: newsweek.com
(Bloomberg) — A gauge of pending US existing-home sales rebounded sharply in December to a five-month high, suggesting the recent drop in mortgage rates is helping to stabilize the resale market.
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The National Association of Realtors’ index of contract signings increased 8.3% to 77.3 after holding at a record low a month earlier, according to data out Friday. Last month’s advance — the largest since mid-2020 — exceeded all estimates in a Bloomberg survey of economists.
“The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices,” Lawrence Yun, NAR’s chief economist, said in a statement. “Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand.”
While 30-year fixed mortgage rates remain below 7%, a sustained decline is needed to encourage more homeowners to list homes that are financed at much lower levels. Until that develops, a limited inventory of previously owned homes will make it difficult for the resale market to rapidly gain traction.
A lack of listings have also worked to keep existing-home prices elevated. At the same time, builders have been filling the void with new construction. The number of new houses for sale at the end of 2023 rose to a more than one-year high, helping push those prices down.
The pending-home sales report is a leading indicator of existing-home sales given houses typically go under contract a month or two before they’re sold. Those sales are expected to increase 13% this year, according to NAR’s economic outlook. They slumped 18.7% in 2023.
The NAR’s report showed the index of contract signings for existing homes jumped nearly 12% in the South, the biggest US housing market. That was the largest advance since June 2020. Pending sales also surged 14% in the West and climbed 5.6% in the Midwest.
–With assistance from Kristy Scheuble.
(Adds graphic)
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Source: finance.yahoo.com
Home sales plunged in 2023 to a nearly 30-year low amid surging mortgage rates, a shortage of available properties and rising real estate prices.
The National Association of Realtors said Friday that existing U.S. home sales totaled 4.09 million last year, an 18.7% decline from 2022. That is the weakest year for home sales since 1995 and the biggest annual decline since 2007, the start of the housing slump of the late 2000s.
The median national home price for all of last year edged up just under 1% to record high $389,800, the NAR said. Only about 16% of homes around the country were affordable for the typical home buyer last year, Redfin economist Zhao Chen told CBS News last month. By comparison, the share stood at about 40% prior to 2022.
Home inventory remains below pre-pandemic levels
04:08
The average rate on a 30-year home loan was 6.6% this week, according to mortgage buyer Freddie Mac. If rates continue to ease, as many economists expect, that should help boost demand heading into the spring homebuying season, which traditionally begins in late February.
Still, the average rate remains sharply higher than just two years ago, when it was 3.56%. That large gap between rates now and then has helped limit the number of previously occupied homes on the market by discouraging homeowners who locked in rock-bottom rates from selling.
“We need more inventory to get the market moving,” said Lawrence Yun, the NAR’s chief economist.
Despite easing mortgage rates, existing home sales fell 1% in December from the previous month to a seasonally adjusted annual rate of 3.78 million, the slowest sales pace since August 2010, the NAR said.
Many economists expect mortgage rates to remain just above 6% by year-end.
“We expect mortgage rates to drop back from 6.8% currently to 6.25% by the end of the year,” Thomas Ryan, property economist with Capital Economics, in a report. “In our view, that modest fall won’t be enough to unwind mortgage rate ‘lock-in’ and bring a great deal more stock onto the market. Because of that, we’re forecasting a subdued recovery in sales volumes to 4.3 million by end-2024.”
December’s sales fell 6.2% from a year earlier. Last month’s sales pace is short of the roughly 3.83 million that economists were expecting, according to FactSet.
“The latest month’s sales look to be the bottom before inevitably turning higher in the new year,” Yun said. “Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.”
According to a recent survey from Fannie Mae, as of December some 31% of consumers expected mortgage rates to decline over the next 12 months, a more optimistic outlook than the previous month.
Source: cbsnews.com
Both the cost of rent and U.S. home prices soared during the pandemic. After historically high home prices and rising mortgage interest rates in 2023, the rent vs. buy calculator now favors renters for the first time in decades. But just barely.
Paying a mortgage builds home equity. That’s the difference between the current value of the home and the amount of money paid in, minus any liens on the property. When a homebuyer sells, they pocket any surplus, after expenses. For years, home ownership has been a way to build individual and generational wealth.
Paying rent doesn’t build equity. But that doesn’t mean it’s a waste of money, despite what some financial gurus might try to tell you. Home prices are high and the availability of affordable properties hit an all-time low in 2023. So renting is a smarter financial decision for many U.S. residents right now.
Personal finances and the national housing market aren’t the only things to consider. The rent vs. buy calculator includes many variables. They vary from person to person and year to year.
Age, lifestyle, career outlook and financial risk tolerance matter. Where you want to live both factor into the decision. Take a look at Redfin’s rent vs. buy calculator to evaluate which option makes more sense for you.
Many renters will benefit from extending their lease into 2024. Here are six reasons why renting is a good choice right now.
Redfin reports that buying a home costs 25 percent more than renting in 2023. In fact, last year was the most expensive year for home prices in Redfin’s records. A buyer making the country’s median wage would need to pay 41.4 percent of their income for a home. That’s well above the 30 percent recommended by experts.
Record high home prices were only part of the issue. High interest rates and low inventory kept home prices elevated through the end of 2023
In contrast, nationwide rent prices actually fell late last year. According to the December Rent Report, rent prices dropped .57 percent month-over-month. Rates were also down 2.09 percent from December 2022.
In cities, the price difference between buying and renting is even steeper. It was more expensive to buy a home than to rent one in all but four major metropolitan areas in May 2023.
Purchasing a home is a major financial investment. Buyers typically need a 20 percent down payment to secure a mortgage. When housing stock is low, they may also need to offer more than the asking price. They might also need to compete in bidding wars or be able to pay a percentage in cash to secure the house they want.
Renting is more cost-effective for many. A typical apartment lease includes a security deposit. Rents get this security deposit back when they move out if there’s no damage, outstanding fees or rent owed. Fees for parking spaces or having pets in the apartment added. A rent calculator can help determine your budget.
It’s usually cheaper month to month as well. Business Insider reports that U.S. homeowners pay a median of $2,690 each year in property taxes. Property taxes, mortgage interest and home repair costs are tax deductible. But these costs add up.
Renter’s insurance is almost always cheaper than homeowner’s insurance. NerdWallet states that the average price for renter’s insurance in the United States is $148 a year. That breaks down to just $12 per month. The same outlet reports that homeowner’s insurance typically costs $1,820 a year. Rates vary state to state.
A lease may also include some (or all) utilities. This means fewer bills to pay and a more predictable household budget.
A homeowner has to pay for emergency expenses like a broken water heater or a new roof out of their own pocket. They also have to file their own insurance claims. Then they need to make any necessary repairs – or hire professionals to do so. But renters can pass these responsibilities on to their landlord or property manager.
In addition, renters don’t need to stress about lawn care, landscaping, or snow removal either. That saves a lot of time, stress, and money over the course of a lease.
As a bonus, many rentals offer communal amenities. These can include workspaces and lobbies, rooftop patios and grills, pools and playgrounds. Residents can also enjoy perks like gyms, dog wash stations or bike storage. Residents get all the benefits without membership fees or maintenance.
Building home equity is an investment with higher upfront costs. So experts recommend that residents stay in their home for at least five years to break even. But high housing costs and high interest rates mean that reaching the break-even point may take even longer.
To recoup their investment, homeowners need to commit to staying in one place for years. Homes usually appreciate in value, but there’s no guarantee homeowners will turn a profit..
Renting is best for people who need flexibility. Applying for a mortgage requires a stable job and regular and predictable paychecks.
People planning a major career change may be better off renting for now. The same goes for people facing job insecurity. Going back to school, retirement or caregiving can also influence income. A renter can re-evaluate before signing a year-long lease. Homeowners are tied to a 15- or 30-year mortgage.
Renting is a great way to explore different neighborhoods, home types and amenities. Location is the one thing about a home that buyers can’t change. So it’s smart to rent in a neighborhood before committing to a mortgage. Or you could experiment with the best of both worlds with a rent-to-own home.
Renting can also allow residents to experience different house types. They can experience living in apartments, townhomes, duplexes and single-family homes).
Renting is a smart option for many. But there are certain instances when the rent or buy calculator favors purchasing a home instead.
Housing experts say that the number of homes available will increase in 2024. More housing stock means home prices could tick downward. That’s a plus for buyers.
Lawrence Yun, National Association of Realtors (NAR) chief economist, predicts that 1.48 million new housing projects will begin in 2024. That number includes 1.04 million single-family units.
Mortgage interest rates have been holding steady for the last several weeks. Rates hovered around the 7 percent mark for 30-year fixed rate mortgages and just over 6 percent for 15-year fixed rate mortgages. That’s down from last year’s high.
“Many of the factors that made 2023 the least affordable year for homebuying on record are easing,” said Redfin Senior Economist Elijah de la Campa. “Mortgage rates are under 7 percent for the first time in months, home price growth is slowing as lower rates prompt more people to list their homes, and overall inflation continues to cool. We’ll likely see a jump in home purchases in the new year as buyers take advantage of lower mortgage rates and more listings after the holidays.”
But it’s important to note that these available properties are at the high end of the market. Affordable housing numbers remain historically low.
More housing stock and lower interest rates will help push home prices lower. Housing experts predict certain markets will rebound first.
“Metro markets in southern states will likely outperform others due to faster job increases,” says Yun, NAR chief economist. “While markets in the Midwest will experience gains from being in the most affordable region.”
Choosing whether to rent or buy is a personal decision that depends on many factors. For many U.S. residents, renting is a more affordable and flexible option right now, but investing in a home is never a bad idea.
Check out houses and apartments for rent.
Looking to buy? See homes for sale here.
Source: rent.com
Existing-home sales fell to their lowest level in nearly 30 years in December—but that didn’t cool red-hot home prices, with the median price reaching an all-time high of $389,800, the National Association of REALTORS® reported Friday.
Existing-home sales—which include completed transactions for single-family homes, townhomes, condos and co-ops—declined 1% month over month in December and are down 6.2% compared to a year earlier, NAR’s latest sales index shows. But lower mortgage rates, which are now below historical norms, likely will set the stage for stronger sales in 2024, NAR predicts.
“The latest month’s sales look to be the bottom before inevitably turning higher in the new year,” says NAR Chief Economist Lawrence Yun. “Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in the upcoming months.”
But home buyers nationwide are still facing a dearth of options. Total housing inventory at the end of December was down 11.5% from November, remaining at historical lows. Many would-be sellers are reluctant to trade in their super-low mortgage rates from just a couple of years ago and make a move at today’s higher rates and home prices. This “lock-in effect” has been blamed for subduing housing inventory, along with sluggish new-home construction that economists say isn’t keeping pace with demographic needs.
With home prices continuing to surge, homeowners are watching their equity grow. Yun says 85 million homeowners saw gains in housing wealth last month. The average U.S. homeowner with a mortgage has built more than $300,000 in equity since their purchase date, according to CoreLogic’s equity report.
However, “the recent rapid, three-year rise in home prices is unsustainable,” Yun says. “If prices continue at the current pace, the country could accelerate into ‘haves’ and ‘have-nots.’ Creating a path towards homeownership for today’s renters is essential. It requires economic and income growth and, most importantly, a steady buildup of home construction.”
Builders are trying to ramp up construction, but there are production swings from month to month. Housing construction fell 4.3% in December but remains above 1 million units, the Commerce Department reported this week. Single-family housing permits—a gauge of future construction—posted an uptick last month, indicating that more new inventory is on the way. Still, it’s likely to be a challenging year for new-home construction due to higher mortgage rates and tight monetary policy, says Alicia Huey, chair of the National Association of Home Builders.
“Moderating mortgage rates are expected to provide a boost to new-home construction in 2024, but an uptick in building material prices and a shortage of buildable lots and skilled labor are serious challenges for home builders,” adds Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis.
In the existing-home market, homes continue to sell fast. Fifty-eight percent of those sold in December were on the market for less than a month, NAR’s latest research data shows. NAR has predicted a stronger housing market for 2024. Here are more key housing indicators from NAR’s December report:
The following is a closer look at how existing-home sales fared across the country in December:
Source: nar.realtor
There’s cautious optimism in the air among area real estate professionals looking into the 2024 home sales market.
If trends continue, they see mortgage rates going down and listings going up.
The key word is “if.”
“Looking ahead to 2024, we anticipate mortgage interest rates to settle in the 6% range, which will attract even more buyers into the market, especially come spring,” said Jeanette Schneider, president of Re-Max of Southeastern Michigan.
“Current homeowners who held onto their home due to a favorable interest rate may decide their interest rate isn’t worth keeping a home that no longer meets their needs, and that should bring a bit more inventory to the market.”
Adds Karen Kage, chief executive officer of Realcomp II Ltd., Michigan’s largest multiple listing service: “We are hopeful for interest rates to continue to trend downward in the new year and consumer confidence levels to rise. As we stand today and look ahead, those are, perhaps, the biggest factors in determining what we might see in 2024.”
Nationally, industry analysts and veterans offer a range of predictions for the upcoming year. Among those:
• Buying a new home will remain expensive, according to Zillow, while Redfin said the median sale price could retreat by 1% in 2024
• The market will still be challenging for first-time homebuyers, but an influx of new apartment units could help manage inflation, according to Lawrence Yun, chief economist for the National Association of Realtors
• Sales of existing homes will rebound in 2025, with home-buying costs leveling off in the second half of 2024, according to investment banker Goldman Sachs
• In Michigan, tech startup real estate tracker Houzeo predicted home sellers will return to the market in 2024 and interest rates will stabilize in the second half of the year.
Locally, Schneider predicted a “slight uptick in home sales in 2024, along with a steady, but moderate increase, in home prices.”
“As boomers consider downsizing, we expect to see more cash offers in the market, providing a challenge for first-time buyers,” she said.
The Press & Guide asked area real estate specialists — with a combined experience of more than seven decades — to size up the market for the next year.
Interviewed for this story are:
• Susie Armiak, Realtor, MBA Realty Powered by Real Estate One, Grosse Ile, three years experience as a licensed Realtor and more than 25 years as a residential home builder
• Eric Blaine, associate broker and branch manager, Dearborn Office, Real Estate One, 10 years experience
• Tracey Solomon, Realtor, Re/Max Masters, Davis/Solomon Realty Group, Flat Rock, more than four years experience
• Maria Starkey, Realtor, Starkey Team, MBA Realty, Grosse Ile, 24 years experience. Also contributing: Michael Starkey, Realtor
• Benjamin Welch, associate broker, Century 21 Curran & Oberski, Dearborn Heights, 18 years experience, including owning and operating Street Rock Management (property management) for five years
Here are edited excerpts of their comments about the year ahead:
Q: Strong demand and tight inventory have defined the real estate market in 2023. How do you see those factors and others shaping the 2024 home sales market?
Armiak: I believe we will continue to see that same trend. Specifically because the higher interests this past year had many sellers/buyers sitting on the fence and new home construction is still behind the demand.
Blaine: Inventory has begun to rise in many markets and is expected to continue that trend in 2024. We expect demand to remain high, as well, and rising inventory will help.
Solomon: Demand is still outpacing supply. Unless this changes, we can expect more of the same seller-weighted market. Election years are historically slower as buyers and sellers may feel unsure about changing economic policy. Post-election, the market typically stabilizes. I suspect that if demand remains high and inventory low, we may not see that expected slowdown. It would be offset by the continued supply/demand pressure.
Starkey: The current market of strong demand and tight inventory is expected to continue into 2024. More buyers than houses continue to be the trend. This is keeping prices in the Downriver market on the high end for homes that are well-maintained and updated. The year ahead will likely continue to be a seller’s market. Homes in need of updating or with deferred maintenance tend to sit on the market longer, resulting in lower noncompeting offers.
Welch: Predicting the 2024 housing market is like forecasting the weather in Michigan – it’s an assumption with a dash of optimism. If interest rates remain the same, the days a home is on the market will continue to increase.
Q: Mortgage interest rates exceeded 7% in 2023. Where do you see mortgage rates in 2024 and how will that affect sales?
Armiak: The most recent Fed meeting stated they would be dropping interest rates three times in 2024 and we are already noticing the benefits of the recently lowered rate, currently at 6.6% for a 30-year fixed rate. (That rate may vary for buyers based on credit score, income and down payment amount.) This rate drop will entice sellers and buyers to make their move. My advice is the sooner the better because it’s going to be crowded in the marketplace once again. Be prepared to make swift and decisive decisions.
Blaine: Rates have held steady for a while and even declined slightly. I expect rates to hold somewhat steady in 2024, allowing more consumers to get off the fence and jump back in the market.
Solomon: Mortgage rates seem to be slowly dropping, which is great news for buyers and sellers. If rates continue to decline, more buyers will enter the market and demand will (again) increase. That will mean a continued shortage of homes and continued pressure on buyers to offer incentives to encourage sellers to accept their offers (fewer contingencies, appraisal guarantees, etc.)
Starkey: Interest rates are anticipated to come down into the 6% range in 2024, which likely will bring more buyers into the market. This may encourage more sellers to list their homes for sale. However, I expect home values will stay steady as demand for homes is expected to continue.
Welch: Increasing interest rates have been a major topic of discussion this year. It appears the Federal Reserve is done with rate hikes and Fannie Mae announced that interest rates could drop into the 6% range by the second quarter. If that happens, I expect a flurry of buyers to hit the market and for home prices to continue to rise.
Q: What is your best advice to potential home sellers for 2024?
Armiak: Connect with an experienced Realtor now to generate your personal marketing strategy. There are multiple items that need to be addressed prior to listing your home. Being prepared will put you in the best position to achieve your goals.
Blaine: It is a great time to sell. Values are up and demand is high.
Solomon: Once you’ve found an agent you trust, listen to their advice. Prepare your home for sale, but don’t overdo it. Timing is everything. Waiting to list until it’s perfect can cost you thousands. Consult your listing agent to prioritize your timing and task list. Utilize a pricing strategy that’s proven effective.
Starkey: Consider taking care of any potential deferred maintenance that could bring down home value. Also, be proactive by having a private home inspection done in advance to address any issues that may come up in a buyer’s private home inspection. This can reduce obstacles throughout the transaction. Last, minimize clutter, reduce excess furnishing that may make the space look smaller and — most importantly — provide a clean home for buyers to tour.
Welch: My advice is to hire a professional so you know all of your options. A professional Realtor will provide guidance, resources and a proven plan to facilitate the sale.
Q: What is your best advice to potential home buyers in 2024?
Armiak: Connect with an experienced Realtor now and begin the pre-approval process with your mortgage lender. It generally takes three months from start to finish. The more prepared you are, the stronger your chances are of getting the home of your dreams. And remember, you can always refinance, but you can’t retrofit the home appreciation value as they continue to rise at an annual rate of 4.7%, per FHFA reports.
Blaine: With value rising — a trend we expect will continue — now is the time to buy before values rise more. Waiting will only cost more and interest rates will not drop enough to help overcome appreciation.
Solomon: Find an agent you trust and communicate your needs and wants. Be financially prepared; your pre-approval matters. Set a home budget that works for your life, not just your balance sheet. Love to travel? Eat out? Give charitably? Factor that in. Adjust your price point to accommodate. (Yes, I’m suggesting you spend less so you can live more.)
Starkey: Get into the market early. Homes are hitting the market every day — not just in spring. Buyers who get a head start should have less competition than those who wait for more homes to choose from. If potential buyers find a home they love, go for it. If interest rates come down, you can always refinance. There are mortgage companies that offer a “no fee” refinance within the first two years of purchase.
Welch: If you are waiting for interest rates to come down before buying a home, it’s time to rethink your strategy. It is best to buy now because if interest rates drop, the number of buyers competing for the home you want will increase significantly, making it more challenging to buy that home.
Q: What communities do you see as most active for home sales in 2024 and why?
Armiak: I believe all communities will enjoy accelerated activity with the promise of lower interest rates, including those looking for second homes and investment properties. We are already seeing an increase in new listings in what is typically known as a quieter time. However, driving factors will continue to be the usual suspects: marriage, family growth, job change, death and divorce.
Blaine: Southeast Michigan markets, including Dearborn, are going to continue strong sales in 2024.
Solomon: Flat Rock, Woodhaven, Wyandotte and Southgate. All show increased values and searches. “Most active” is a hard metric to use as a measurement. A small community won’t show big sales numbers. However, highly rising values and quick list-to-pending sales dates show they are desirable and likely selling at or above asking with appraisal guarantees. Grosse Ile is a good example.
Starkey: The current market of strong demand and tight inventory is expected to continue into 2024. More buyers than houses continue to be the trend. This is keeping prices in the Downriver market on the high end for homes that are well-maintained and updated. The year ahead will likely continue to be a seller’s market. Homes in need of updating or with deferred maintenance tend to sit on the market longer, resulting in lower noncompeting offers.
Starkey: All Downriver communities will be active for home sales in 2024. The communities with more affordable housing for first-time buyers may see more activity as those buyers get away from renting. Of course, we need homes to come up for sale. Many homeowners are getting older and either moving to warmer climates or looking for less housing maintenance. Investors also like to purchase homes to add to their rental portfolio or to renovate and sell. The “step up” housing may not be as active as many of those homeowners are enjoying 2% to 4% interest rates and are feeling very comfortable with their current housing costs.
Welch: During November in the Downriver area, the number of homes for sale declined by 32% compared with previous months. It’s still a competitive market. With interest floating around 7.5%, there are many buyers just sitting on the bench waiting for rates to come down before they make their move. Imagine what it will be like if, and when, that happens.
Source: pressandguide.com
NAR chief economist Lawrence Yun said that while immediate contract activity has not increased, there is a growing interest among potential buyers. “Although declining mortgage rates did not induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a higher number of lockbox openings,” Yun said … [Read more…]
Michael Mincey / iStock.com
Mortgage rates began dropping steadily in the last months of 2023, down to 6.61% for a 30-year, fixed-rate loan in the last days of the year, according to data from Freddie Mac.
But 85% of American homeowners remain locked into pre-pandemic mortgage rates of 5% and lower, making them hesitant to sell their home only to purchase another when both home prices and interest rates remain elevated.
Mortgage experts, however, predict that the market may shift in 2024, although not as dramatically as some would hope.
“Mortgage rates will fall to about 6.6% by the end of 2024. The gradual decline in rates combined with the small dip in prices will bring homebuyers some much-needed relief,” Redfin Chief Economist Daryl Fairweather told USA Today.
Jeff Taylor, founder and managing director at Mphasis Digital Risk, agreed that 30-year fixed rates will stay will in the “mid-6%” range.
National Association of Realtors chief economist Lawrence Yun made a bold prediction regarding the market. “A marked turn can be expected as mortgage rates have plunged in recent weeks,” he said.
However, even with interest rates falling, the lack of single-family homes on the market may keep prices elevated.
“While single-family housing starts have steadily increased throughout 2023, it will take years of accelerated new home construction to narrow the supply shortage gap from more than a decade of underbuilding,” Odeta Kushi, Deputy Chief Economist at First American, told USA Today.
Further, with existing homeowners refusing to sell because interest rates won’t match what they secured pre-pandemic, the housing shortage is destined to continue through 2024.
The rising costs of home insurance is also deterring new homebuyers, according to a recent Newsweek article. Real estate investors told the publication that it may be harder to get a mortgage in states like Florida, which is prone to extreme weather such as hurricanes, floods and tornadoes. If you can’t insure a home, you can’t secure a mortgage for its purchase. Current homeowners may experience rate hikes, too, but once a home is insured, it’s easier to maintain a policy than to write a new one.
California, Louisiana, Texas and Colorado also experienced rate hikes in 2023, as previously reported by GoBankingRates. Other states may be susceptible to future rate hikes, according to HUB Private Client research. These states include Minnesota, Missouri, Indiana and South Dakota, which is alarming as they were not previously considered areas at high-risk of weather-related claims.
But even with rising costs, 2024 could be the first year the U.S. sees an uptick in new home construction, as predicted by Robert Dietz, Chief Economist for the National Association of Home Builders.
“Due to low existing inventory, new construction has increased to approximately one-third of total single-family inventory in recent months when historically it was only 10% to 15%,” he said.
After declines in 2022 and 2023, the increase in new construction could help alleviate some of the housing shortage. But even an increased inventory of new homes won’t make a significant difference in the housing market for 2024. “Home prices keep marching higher,” Yun told USA Today. “Only a dramatic rise in supply will dampen price appreciation.
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Source: gobankingrates.com