A nice house in a rural area that someone might be buying in 2024.


Market cooling

Despite home price increases, the market has been cooling. Fewer buyers are putting in offers on houses, so you’ll face less competition.

Frey has seen this cooling in his local market.

“Instead of 10-20 offers on a property, there might be three or four, which are better odds,” he explains. According to Frey, it was insanely hot and out of balance before the interest rate increase in March of 2022, but the rate hike has given people some hope.

Some buyers dropped out of the market due to the rate hike. Buyers who previously lost out on multiple homes may not face as many rounds of offers and rejections now.

Possible Mortgage Rate Increase

According to the Freddie Mac Economic, Housing, and Mortgage Market Outlook from November 2023, mortgage origination volumes are forecasted to stay low in 2024, with slight growth expected in 2025. Despite rising house prices, reduced sales are anticipated to decrease purchase mortgage volumes. Limited refinance activity is foreseen if mortgage rates remain above 6%. Overall, mortgage origination activity is predicted to remain subdued throughout most of 2024, gradually picking up toward the year’s end and showing modest increases in 2025.

When mortgage rates rise, it can cause a temporary dip in homebuying activity. However, it’s important to remember that rates are still historically low.

“Better to buy now and begin your experience of getting a fixed-rate housing cost,” Frey says, “It’s never too soon to start saving money.”

Even though rates may be higher than two years ago, buying sooner rather than guarantees a more predictable monthly payment.

At the peak of U.S. inflation, the rent-to-income ratio has hit 40%, marking the least affordable rental market in decades. In August 2023, the median asking rent for U.S. single-family detached or attached housing units stood at $2,600, reflecting a 4% increase compared to the previous year, according to CoreLogic.

Inventory

Tight inventory has contributed to the growth in housing prices over the last few years. With more buyers on the market than homes for sale, it led to bidding wars and price inflation. While new home listings have slowed in recent months, what will housing inventory look like going forward?

According to the National Association of Realtors, total existing home sales across single-family homes, townhomes, condominiums, and co-ops declined by 4.1% from September to a seasonally adjusted annual rate of 3.79 million in October.

Year-over-year, sales saw a significant drop of 14.6%, down from 4.44 million in October 2022. Furthermore, there is an anticipation of a 4.5% rise in sales of newly constructed homes for 2023 compared to the previous year, with a projected additional increase of 19.4% forecasted for 2024.

“We’ve been severely underbuilding for quite some time, and there’s a shortage in the market,” says Frey.

As a result, inventory continues to tighten, and new home building hasn’t kept up with demand, which could keep home prices from dropping.

There are, however, some signs of inventory increasing, according to HomeLight’s Top Agent Insights Report for End of Year 2023, 40% of agents reported that housing inventory in their market increased over the previous quarter.

Rising rental rates

Supply and demand are fundamental drivers in the economy, influencing rental prices. When supply exceeds demand, prices tend to drop. In the last two years, exceptional demand amid low supply propelled rental rates to surge by double digits annually. Nevertheless, there are indications of a shift in supply and demand dynamics.

Rent prices, as indicated in a November 2023 report from Rent.com, continued their downward trend in October, declining over -1.5% from September and almost one-third of a percent from last year.

This consecutive monthly decline follows six months of steady increases starting last February. The current national median price stands at $1,978.

If you live in a market where rents have grown by double-digit percentages, locking in a fixed housing payment could be the best solution.



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Mike McNamara

Mike McNamara

A Las Vegas Realtor since 2008. Mike has a wide range of knowledge around all things Las Vegas.

Willow Manor