Housing Market Predictions For 2024: When Will Home Prices Be Affordable Again?

July 9, 2024

With the increase in the mortgage rates, the housing market saw less sales in the previous month. It is expected that the housing market is navigating through a complex landscape that is full of challenges and opportunities. While the market is still coping up with the issues of low inventory and affordability, we can still hope for stability and recovery.

However, experts advise that once the mortgage rates are lowered, the market might gain momentum and get back stronger. Besides, there are various factors influencing the real estate market, so, let’s read further and see what we can expect!

Current Status of Housing Market

Where the news about the crash of the housing market is spreading like fire, experts are trying to extinguish the situation and provide a positive response! According to the recent reports, as per April 2024, home prices for a median existing-home have reached $407,600 from $379,100 in January 2024. It reflects a moderate increase, which is driven by limited supply and high demand. However, some regions are still reporting robust activity, but others are facing a slowdown. It is expected that the economic uncertainty is a major influence on less sales and increased prices.

Therefore, good news of the housing market’s recovery is again poking and is expected that by Spring, resale inventory might start to emerge. It can also result in slow growth of home prices, which can stabilize the market and we can see some growth.

Economic Factors influencing the Housing Market

To understand the current scenario of the housing market, learning about the factors influencing it is more essential. There are several key factors at play, including –

Impact of Interest Rates

In the housing market, interest rates have a significant role to play. To combat inflation,the Federal Reserve adjusted the rates, which led to an average mortgage rate of around 6%. Rise in the interest rates have affected the affordability and reduced the buying power of potential house owners.

Role of Economic Growth and Inflation

Another significant factor affecting the housing market is inflation. It is affecting everything from construction costs to purchasing power of the consumer. However, economic growth has been steady for now, with an increase of 2% in GDP expected in this year. The economic growth will hopefully support income stability and job creation further influencing the housing demand.

Income Trends and Employment Rates

The employment rate in the US has been stable and is contributing to the steady income for many Americans. It is essential for homebuyers to have a stable and consistent income to seek mortgage approvals. Thus, the stability of employment and income has a significant role in the contribution to the housing market.

Regional Variations in the Housing Market

Understanding the regional variations is pivotal for making informed choices, when selling or buying a house.

High-Growth Areas

• States like Arizona, Florida, and Texas are continuing to attract new residents. The reason behind this is good economic opportunities, job prospects and favorable climatic conditions. However, these areas are expected to see substantial appreciation in home prices and high demand.
• Whereas the cities with strong tech industries like Austin, Raleigh and Denver are again the hotspot for great real estate investments. High demand for housing properties in these areas have risen because of employment opportunities.

Declining Markets

• Cities in the Midwest and Northeast have been experiencing slow growth and even the population is declining. Besides, the prices are declining yet, the market is leading to be stable.
• Rural areas in the US are experiencing stable demand with modest increase in property value.

Housing Market Predictions for 2024

Experts have suggested that the housing market will improve, but the buyers are still hesitant to purchase property at the moment. Also, one of the reasons for the delay is inflation. Due to inflation, the Federal Reserve has been repeatedly increasing the federal funds rate, which might not go down soon.

Mortgage rates have a major influence on home affordability, which is expected to decline in 2024, after rapidly increasing in 2023. However, it is being anticipated that throughout 2024, we can see changes in the mortgage rates, which is a sign of ease. Experts have even predicted that an average 30-year fixed rate mortgage can fall 6-7%, providing relief to home buyers.

Another critical factor, home prices, show different trends in different regions. Numerous experts have suggested a drop of 5-10% in a few areas, where the prices surged during the pandemic. Besides, Grand Rapids, New York,and Albany, affordable and climate-resilient areas might see a substantial increase in property values due to more demand.

But, first-time home buyers might continue to face challenges in terms of affordability and mortgage. Despite improvement in the current trends, the cost of financing a home still remains high. However, it is advised that potential buyers must use different tools, like mortgage calculators to better understand the financial readiness.

Thus, 2024 might not bring a dramatic improvement in terms of affordability, but likely to offer relief through low mortgage rates. We can see a rise in inventory and price stability. So, buyers must be prepared and stay informed about the new market trends and changes that are essential for the housing market.

Challenges and Risks to Watch Out

There are challenges and risks that every home buyer must look out for before investing in the housing market. Listed below are the challenges and risks –

Potential Economic or Political Disruptions

Unexpected shifts in the monetary policies or geopolitical tensions have a major role in the disruption of the housing market. However, it is essential to be informed about the changes that are crucial for anticipating the impact on the housing market.

Risks Related to Federal Housing Policies

Changes in the federal housing policies, like adjustments in mortgage interests or tax reforms, that significantly affect the housing market. To mitigate potential risks, be aware of the changes in the policies.

Advice on Mitigating Risks

The buyers must spread their investments across different regions and property types. With diversified investments, you can easily avoid risks and challenges ahead. Also, it is essential to monitor economic indicators and market trends, which play a crucial role in the housing market. Besides, real estate agents and financial advisors are always present to guide you through uncertainties and help you make informed choices.

You Can Read Also: Why Should You Hire a Real Estate Agent as a First-Time Seller?

Conclusion

There must be a question in your head now, whether it is the right time to purchase a house? Well, it is highly a personal decision! However, if you follow the market trends, then you must keep an eye and wait for the better condition of the housing market. Also, if you are a first-time buyer, seller or investor, you must seek expert guidance to know market insights in detail. So, get the personalized advice and invest in the best property you have been looking for!