“[E]xternal factors may be at play such as escalating interest rates, inflation, employment shifts and other market dynamics,” said Rob Barber, CEO of Attom, in a report. However, Barber acknowledged that an acceleration in post-holiday filings was also likely a contributing factor. Divounguy also notes that several factors, including Millennials entering their prime home-buying years, wage growth and financial wealth are tailwinds that will sustain housing demand in 2024. Meanwhile, new homes continued to lure buyers frustrated with the lack of resale inventory. Existing-home sales showed tentative signs of a pre-spring thaw in January, climbing 3.1% from the month before, according to the latest data from the National Association of Realtors (NAR).Sales dipped 1.7% from a year ago.

And in 2022, mortgage rates spiked from all-time lows to all-century highs in a matter of months. But if anything is cursed in this world, it’s the 21st-century American housing market. The supply of homes all but stagnated just as the Millennial generation—the largest in American history—aged into its prime https://www.topforexnews.org/investing/most-profitable-investment/ home-buying years. College graduates plowed into downtown neighborhoods, leading to a sharp rise in living costs in America’s largest cities, and then pushed into the suburbs. The combination of constricted supply, skyrocketing demand, and bargain-basement rates set the stage for a surge in home prices.

  1. Despite foreclosure activity trending up nationally, experts generally don’t expect to see a wave of foreclosures in 2024.
  2. “Given that interest rates are expected to increase, housing affordability will be under additional pressure in 2022.”
  3. However, when mortgage rates finally go on the descent, Gumbinger says don’t hope they cool too quickly.
  4. Among the differences between today’s housing market and the 2008 housing crash is that lending standards are much tighter now due to lessons learned and new regulations enacted after the last crisis.
  5. At the same time, to curb runaway inflation, the Fed began to aggressively raise its benchmark lending rate, which indirectly pushed up mortgage rates.

Moreover, during a recession, employers typically conduct layoffs and unemployment rises. So, if you own a home and then lose your job, you risk defaulting on your loan. Though a burst of new home construction has helped to bolster inventory, it hasn’t provided enough https://www.day-trading.info/how-to-avoid-overconfidence-bias-avoid-the/ supply to meet demand. Another reason for the tight housing inventory is that people are living longer. Yet, that recession never materialized thanks to a robust job market, rising wages, low unemployment and resilient consumer spending fueling a strong economy.

“[C]onsumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that’s impacting home sales.” Economists have long predicted that the housing market would eventually cool as home values become a victim of their own success. After posting the a year-over-year decrease in February 2023 for the first time in more than a decade, the median sale price of a single-family home is on the rise again, with a 4.4% annual gain in December, according to NAR. That represents the sixth month in a row of year-over-year increases. December 2023’s median of $382,600 is off the all-time-high of $413,800, but not by much, especially for a typically quiet time of year.

High home prices and mortgage rates north of 7% have kept many would-be buyers on the sidelines, hoping that an overheated market will lead to a housing crash that will make homes more affordable. Declining mortgage rates will likely incentivize would-be buyers anxious to own a home to jump into the market. Expect this increased demand amid today’s tight housing supply to put upward pressure on home prices. “The housing recession is essentially over,” said Lawrence Yun, NAR’s chief economist. Home values held steady even as mortgage rates soared to 8% in October 2023, reaching their highest levels in more than 23 years.

Housing Market Forecast for 2024

Inventories remain frustratingly tight, with NAR’s December data showing only a 3.2-month supply. While few economists expect a housing crash in the near future, many do think the market will cool off because current mortgage rates are making buying a home even less affordable. Average rates for a 30-year fixed-rate mortgage have remained above 7% for the past forex day trading and short term trading techniques five weeks, according to mortgage buyer Freddie Mac. A severe shortage of homes available for sale is keeping prices elevated. And Yun says if mortgage rates come down, even by just a little, more prospective homeowners could enter the market, which could drive up prices even more. NAR data shows that median sale prices of existing homes are near record highs.

The national median existing-home price is roughly 48% higher than in January 2020. If the latest pending home sales data is a harbinger of spring housing market activity then we’re in for a paltry season. What’s more, builders remember the Great Recession all too well, and they’ve been cautious about their pace of construction.

The affordability crisis could lead to the bubble bursting

The most recent housing bubble is borne out of a severe imbalance in the real estate market. Almost as soon as home prices began their unprecedented climb in 2020, doomsayers began warning of a looming crisis. In 15 years, we’ve had a historic housing crash, a historic housing crunch, a historic pandemic-fueled buying spree, and a historic mortgage-rate spiral. If you can’t afford to buy in your current city, consider looking elsewhere.

Pro Tips for Selling in Today’s Real Estate Market

“Whether it was windows, lumber, garage doors, roof tiles, or washing machines, [suppliers were] never able to catch up from that standing start in spring of 2020,” the financial commentator Joe Weisenthal told me. In April of 2021, half of the houses listed nationwide had pending contracts in less than a week. One Maryland resident infamously included in her offer “a pledge to name her first-born child after the seller.” She didn’t even get the house.

Though a large number of Americans believe the housing market is at risk of crashing, the economists who study housing market conditions overwhelmingly do not expect a crash in 2024 or beyond. Her work has been published or syndicated on Forbes Advisor, SoFi, MSN and Nasdaq, among other media outlets. At the same time, to curb runaway inflation, the Fed began to aggressively raise its benchmark lending rate, which indirectly pushed up mortgage rates. If you own a home, refinancing during a recession to lock in a lower mortgage rate could be a good option until the housing market stabilizes. Check with lenders to determine your eligibility and use a mortgage refinance calculator to determine if refinancing is a viable option.

Conversely, by late 2009, nearly a quarter of U.S. homeowners were underwater, or had negative equity, in their homes, meaning they owed more on their mortgages than what they were worth. If you’re in a financial position to buy a home you plan to live in for the long term, it won’t matter when you buy it because you will live in it through economic highs and lows. However, if you are looking to buy real estate as a short-term investment, it will come with more risk if you buy at the height before a recession.

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