You’re not alone if you’re concerned about the current housing market.
Homebuying and rental prices have risen to surpass pre-pandemic levels, leaving many millennials and other prospective buyers to wonder how they’ll afford a home.
People from all sides of the political spectrum and the real estate industry are panicking, causing the market to continue experiencing a downturn.
However, projections for 2023 and 2024 are relatively hopeful, suggesting that housing prices may drop and conditions may improve.
That said, there are several things you should know before heading into the 2024 housing market.
The Current State of the Real Estate Market
Several important factors have affected the current housing market.
First, the Covid-19 pandemic impacted real estate by introducing remote work. That allowed buyers to seek homes, and offer more than the asking prices.
On the other hand, investors claimed 28% of all single-family homes in the first quarter of 2022, driving prices up—and many homebuyers out of the market.
The housing market grew hot, and investment firms began buying housing stock for cash. As a result, the Federal Reserve raised interest rates in March 2022—as of August 2022, mortgage rates had risen from 3% to 5.5%.
Many people found themselves unable to afford to buy—or even rent a home.
As the economy recovered from the pandemic, we witnessed declining home sales and ongoing affordability problems. Since many financial institutions suggest an impending recession, people began to recede from the market.
In March 2023, three central banks, including the Silicon Valley Bank, failed. Economists suggest that this might provoke a downward trend in mortgage rates since investors will turn to safer assets.
Ultimately, the future remains uncertain, but there are several important factors of 2023 to remember.
Forecast for 2023
The forecast for the 2023 housing market remains murky since shifting economic conditions are provoking unforeseen changes.
However, experts agree that housing prices will likely fall throughout 2023. The National Association of Realtors housing index suggests that they already have.
Experts suggest that mortgage rates will begin to drop, and home prices may soften throughout 2023. While nothing will change significantly in the second quarter of 2023, this trend will likely continue through 2024.
Although many people are worried about a housing market crash, which consists of a 20% to 30% decrease in prices, experts predict that the market will remain steady in 2023. Inventory levels will remain low, and home-price growth will slow, leading to a slight downturn in prices.
Some markets will continue to increase through 2023, though prices will vary depending on the location.
Ultimately, a crash is unlikely, and homeowner equity will continue to rise.
Projected Changes in 2024
The market will likely slow down and continue to do so over the next five years.
An expert panel with Zillow agreed that home-price growth would slow, rising only .2% over 2023, and home value growth will drop from 5.5% in 2023 to 3.4% in 2024 and 3.3% in 2025.
Because the number of homes for sale will remain stagnant, prices won’t drop as much as they otherwise would have.
Rising interest rates might make it more expensive for buyers to borrow, and mortgage rates will likely continue to grow, mitigating this renewed buying power.
The U.S. News Housing Market Index suggests that inventory will remain low over the next five years, creating pent-up demand for housing and a potential increase in new construction. These new homes will likely adhere to new environmental standards as climate change progresses. Most experts agree that housing prices will likely begin to fall in late 2023 and into 2024, allowing buyers to regain purchasing power.
How You Can Best Prepare for the 2024 Housing Market
If you plan on participating in the real estate market in 2024, consider the following tips and strategies.
Don’t Wait to Buy a Home- If you plan on buying a home soon, consider doing it now since home prices are unlikely to crash quickly, and the mortgage rates will only begin to decline next year. Although prices will slow, they likely won’t drop anytime soon.
Or Wait Until 2024- If you can, wait to invest in a new property until 2024, as prices will stagnate slightly, and the Zillow panelists above suggest that it will be a fast-growing market for buyers.
Prepare Accordingly- Buying or selling a home is a personal decision, but you can prepare by keeping an eye on critical metrics and calculating your investments. Use a mortgage calculator, for example, to determine your monthly interest rates and down payments.
Don’t Try to Predict the Market- Conditions are somewhat complex nowadays, so it’s best not to agonize over the state of the market and its potential changes. Most experts recommend buying a home when you’re financially secure, have a regular income, and are prepared to invest the time and money.
So, Will Housing Prices Go Down Before 2024?
While housing prices may stagnate slightly, they are unlikely to go down significantly before 2024.
The price-growth rate should slow continuously over the next few years, though interest rates and mortgage rates will likely rise.
As 2023 comes to an end, conditions may change, so check back for more news before you jump the gun!
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