Real Estate Marketing & Beyond
The question on everybody’s mind is whether property prices will drop in 2024. How long can the US real estate market sustain elevated home prices? If it can’t, when is a market correction due? To form an educated guess, we must look back at recent events and factors shaping the current situation.
According to trustworthy sources, such as Forbes, Zillow, and Trulia, property prices will decrease by about 5 to 10 percent by the fourth quarter of 2024 as demand slowly decreases. However, an imminent correction will strongly depend on regional housing market conditions and job market growth. And let's add the most significant (and unpredictable) ingredients to the mix, namely interest rates and the housing shortage.
Even if you investigate real estate market predictions for 2024, chances are national forecasts may not apply to your desired neighborhood. If you want to move forward with your housing plans, the best course of action is to browse a real estate agents directory and contact the local agents. Only they have access to real estate comps, MLS listings, and local market trends that can help you buy, rent, sell, or invest in residential, commercial, or industrial real estate.
Redfin reported that in January 2024, the American median home sale price was approximately $402,000. This average increased by 5.1 percent from the previous year. Furthermore, we can establish a 2.8 percent annual growth in properties sold. The 30-year fixed-rate mortgage rate was at 6.6 percent.
In the last few years, May 2022 experienced the highest median real estate sale price at about $440,000. At the same time, properties were the most affordable in January 2022 (approximately $375,000) and January 2023 ($390,000).
Looking at Bank Rates, we notice different median home prices, yet the tendency remains the same. The site announces a median property sale price of $380,000. The summer of 2022, with a median of $414K, and July 2023, with an average of $407K, recorded the heftiest property medians.
Simultaneously, real estate prices decreased at the beginning of each year. See January 2022 with a median of $355,00 and January 2023 with an average of $360,000. Similarly, this January started with a slightly lower median property sale price of $380K. Under such circumstances, can we expect a significant drop in home prices in Q1 2025?
After years of rocketing faster than a bullet, some experts agree that the property price party might be winding down. Zillow, a reliable source of real estate data, hints that while prices have defied gravity, what goes up must come down. Or at least level off. The intricacies of supply and demand could herald a softening market, i.e., market correction. So, will costs dive from the stratosphere? Not necessarily. Still, the market and prices can cool off, giving buyers and investors more breathing room.
Trulia, another real estate forecaster, also suggests bracing for potential market corrections. However, we must be clear on one thing! Sellers mustn't believe correction equals catastrophe. Instead, the market will take a well-deserved breather and recalibrate prices more sustainably. A correction might be a golden ticket for those fantasizing about home ownership.
In the long run, sellers will also profit from housing market corrections, for instance, when relocating or buying residential investment properties. Everybody should embrace flexibility and readiness to adapt to the market's rhythm.
A real estate market forecast can only be complete when discussing interest rates. Let's examine them, shall we?
At the beginning of March 2024, the 30-year fixed mortgage's annual percentage rate (APR) was 7.24 percent, down from 7.50 percent. Simultaneously, the 15-year fixed mortgage's APR was 6.68 percent.
Forbes joins the debate, underscoring interest rates as the puppeteers pulling the strings of the real estate market. Suppose rates move upwards. In that case, the affordability boat could rock. Thus, mortgages become pricier and will likely cool off buyer enthusiasm.
Conversely, steady or plunging rates could keep the market lively and encourage buyers to dive in. In 2024, all eyes will be on these rate ripples. Why are they so important? They could make all the difference between a buyer's market and a seller's fortress.
Property owners can set a higher price in a seller's market and benefit from low inventory at negotiations. On the other hand, a buyer's market advantages house hunters and investors because the demand is lower than the supply. High-interest rates regularly trigger a buyer's market.
Here's where the story gets fascinating. Realtor.com throws a plot twist into the discussion with inventory, or the lack thereof. In 2024, about 2.3 million homes are missing from the American market. Supply versus demand continues to battle in the real estate narrative. What's the prevailing pattern? The increased demand for housing and the scarcity of homes have triggered soaring prices. At the same time, new constructions struggle to keep up with the market.
Suppose more homes will enter the market in 2024. In that case, the tension between supply and demand might ease, and prices could drop. Yet, given economic uncertainties and construction pace issues, this storyline is fraught with ifs and buts.
Building materials were a real nail-biter, forming the core of the construction industry's concerns. Prices have soared thanks to major global events (such as the pandemic, the Ukranian-Russian war, and the closing of mills). As a result, builders and renovators sweat.
Still, a tiny ray of hope flickers in the dark in 2024. Prices are expected to balance, partly due to supply chains untangling themselves. Builders might get a chance to catch their breath.
Here are our key takeaways! Skyrocketing property prices might descend gently rather than crash. A market correction isn't the bogeyman; it's a possible re-tuning of the market to more sustainable frequencies. More homes on the market could mean less pressure on prices. Remember, though, that this chapter is yet to be written. Similarly, interest rates are highly volatile. They might change in a blink of an eye. By all means, they can influence or mislead the market’s mood.
These insights and forecasts, published by experts, were based on economic indicators. For this reason, they must serve as a compass, not a map. The real estate market is prone to unpredictability. Often, local market dynamics can differ from national trends. Everybody should navigate with eyes wide open! Be prepared for challenges! Suppose you want to start your real estate projects before the market settles. Then, work with experienced professionals to benefit from their excellent negotiation skills and market expertise!
