A home for sale sign on Tuesday, Jan. 16, 2024, in Kennesaw, Ga. On Friday, the National Association of Realtors reported that 2023 saw the smallest number of home sales in nearly 30 years. Mike Stewart/AP hide caption
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Mike Stewart/AP
A home for sale sign on Tuesday, Jan. 16, 2024, in Kennesaw, Ga. On Friday, the National Association of Realtors reported that 2023 saw the smallest number of home sales in nearly 30 years.
Mike Stewart/AP
Last year was rough for homebuyers and realtors as a trifecta of forces made it harder than ever to buy a place to live. Or, at least the hardest in nearly three decades.
Mortgage rates neared 8%. Home sellers tend to lower their prices when rates are high. But the nation has been in the midst of a severe housing shortage, so without enough homes to meet demand, prices just kept rising.
"We've actually seen home prices continue to rise for six consecutive months," said Jessica Lautz an economist with the National Association of Realtors. The group reported on Friday that the median home price in 2023 was $389,800 — a record high. Meanwhile, the number of homes sold fell to the lowest level since 1995.
"The jump in interest rates that we saw last year really was a shock to the system," said Lautz.
It's not just that higher mortgage rates made it nearly twice as expensive to buy the same-priced home as a couple of years before. The higher rates also affected the supply of homes on the market. Lautz says people who already have a home and a low 2% or 3% mortgage rate are less likely to put their house up for sale, because to buy another one they'd get stuck with a much higher rate.
It was more difficult to buy new homes too.
"Home builders are being impacted by the jump in interest rates as well," says Lautz. "They have to borrow to build and it's become very expensive for them to do."
Outdated zoning rules are a big factor in the tight housing supply because they often limit construction of smaller homes packed more tightly together — exactly the dense type of housing that is more affordable to build and buy. Overly restrictive zoning, "has restricted private developers from building enough housing to keep up with demand," Tobias Wolf of the American Enterprise Institute testified before Congress this week.
Wait, there's hope for home buyers in 2024
But while all that sounds pretty dismal for anyone wanting to buy a home, realtors sense that things are about to improve for buyers.
"Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months," said NAR Chief Economist Lawrence Yun.
Rates for 30-year fixed-rate mortgages continued to fall over the past week to 6.6% according to the mortgage industry giant Freddie Mac's weekly rate tracker.
And that is making realtors feel better about the months ahead.
"We're at a very interesting moment in the real estate market," said Lautz. The group does a monthly confidence survey of it's members. "We're actually seeing the optimism grow."
She says it's important to remember that people who just bought houses last month locked in their mortgage rates two or three months ago when rates were much higher. But she says her group is hearing from realtors that they're already seeing more interest from homebuyers.
FAQs
Many prospective homebuyers chose to wait things out in 2023, in the hopes that 2024 would bring a more advantageous market. But so far, with mortgage interest rates still relatively high and housing inventory stubbornly low, it looks like 2024 will remain a challenging time to buy a house.
Will my house be worth less in 2024? ›
The majority of forecasts indicate that house prices in the US are expected to rise or remain stable in 2024. The predictions from various economists suggest that mortgage rates are expected to rise in 2024 before potentially cooling to lower than how the year began.
When was the worst year to buy a house? ›
But there's hope for 2024 –NPR.
Is it a buyers or sellers market in 2024 in the USA? ›
Coming into the traditionally busy spring selling season, it seems almost impossible to predict but there are early indications that 2024 could be the year of the “seller sweet spot.” Since 2021, Opendoor has conducted quarterly surveys of over 4,000 prospective home sellers.
Should I buy a house now or wait for a recession? ›
And as you might imagine, recessions are a risky time to buy a home. If you lose your job, for example, a lender will be much less likely to approve your loan application. Even if a recession doesn't affect you directly, if your area is hard-hit, that could have a serious effect on the local real estate market.
Should I sell now or wait until 2024? ›
Best Time to Sell Your House for a Higher Price
April, June, and July are the best months to sell your house in California. The median sale price of houses in June 2023, was $796,400, which is expected to grow more in 2024. However, cities like Arcadia and San Mateo follow an upward trend throughout the year.
Will 2026 be a good year to buy a house? ›
However, increases should slow between 2024 and 2026, and rates may even decline in 2027. Among the factors that could impact mortgage rates in the next 5 years are inflation, Federal Reserve policy, and economic growth. Homebuyers should consider locking in a low mortgage rate now, as rates are expected to rise soon.”
Will my house be worth more in 20 years? ›
How much will property prices rise in 20 years? Based on historical national average data of 3.5% home value growth rates, property prices in the US for residential homes will almost double within 20 years! The reason prices will double at that rate is because of compounding growth.
Will my house increase in value in 10 years? ›
This is a subjective question that will depend on the individual real estate investor. Generally speaking, the higher the appreciation rate the better. In America, home appreciation rates range from 2-6% when looking at the real estate market over a period of 10 years or longer.
What are the best states to buy real estate in 2024? ›
State of play: Columbus, Ohio; Indianapolis; Providence, Rhode Island; Atlanta; Charlotte, North Carolina; Orlando, Florida; and Tampa, Florida, also top this year's ranking of Zillow's hottest housing markets of 2024. Meanwhile, New Orleans, San Antonio, Denver, Houston and Minneapolis sit at the bottom.
There Could Be Structural Problems
If the home has been properly loved and maintained over the years, it may well outlive you. If it hasn't, you could be dealing with windows that won't open, doors that jam, cracks in the foundation and other expensive issues. Pests, too, may have taken their toll on a home over time.
Will the real estate bubble ever burst? ›
Experts overwhelmingly say that the housing market isn't going to crash anytime soon. The last housing crash helped cause today's lack of supply, which is what's keeping prices from falling.
Will 2024 be a better time to buy a house? ›
In summary, buying a house in California in 2024 may be a good time for some buyers, depending on their personal and financial situation. The housing market is expected to rebound from a sluggish year in 2023, with more supply and demand, higher prices and affordability, and lower mortgage rates and inflation.
Will 2024 be a good year for the market? ›
As a whole, analysts are optimistic about the outlook for stock prices in 2024. The consensus analyst price target for the S&P 500 is 5,090, suggesting roughly 8.5% upside from current levels.
What will mortgage rates be in 2024? ›
As of May 23, 2024, the U.S. weekly average for a 30-year fixed-rate mortgage (FRM) was 6.94%, which is a decrease of 0.08% from the previous week. However, it's important to note that this is still higher than the year-ago average of 6.57% and the 52-week average of 7%.
Will my house be worth less in 2023? ›
30-Year Fixed-Rate Mortgage Rate (Avg.) Home Prices: After falling 0.8% year-over-year through December 2023, home prices tracked by the National Association of Realtors are forecast to rebound by 1.8% to $390,000 by year-end 2024.
Will mortgage rates go down in 2025? ›
Morgan Stanley strategists expect the average 30-year fixed mortgage rate to stabilize around 6.25% by the middle of 2025,1 down from nearly 7.8% in fall 2023.
