As 2023 draws to a close, professionals assisting with relocations face a complex housing landscape entering 2024. While recent drops in mortgage rates sparked optimism, enduring obstacles like elevated home prices and low inventory levels continue to challenge homebuyers, especially first-timers.
Looking Back: 2023 Delivered Hardships for Aspiring Homeowners
In mid-December, the average 30-year fixed mortgage rate declined to 6.61%, marking 9 straight weeks of reductions per Freddie Mac. This slide brings some relief, but 2023 dealt significant hurdles for prospective buyers. Rates peaked at 7.79% while median home values exceeded $400k in Q3, according to Forbes. Monthly payments hit record highs, painting a tough picture for hopeful new homeowners.
The Road Ahead in 2024: Cautious Optimism Balancing Persistent Hurdles
Stepping into 2024, optimism is prudent but measured. Home prices should remain high, though softening is possible in some markets. Experts believe the Fed’s rate hikes have paused, perhaps stabilizing mortgage rates. However, affordability issues are expected to linger, fueled by robust demand, thin inventory, and still-elevated rates.
Predictions suggest:
1. Housing supply growth is essential to ease pricing pressure and aid recovery. Rates must cool gradually to prevent demand spikes.
2. After declines, mortgage volume should rebound to $1.95 trillion in 2024 as rates dip to ~6% by year’s end per the MBA.
3. Inventory will stay tight, especially at entry-level, presenting ongoing challenges. Some positive signs exist like builder sentiment and permit upticks.
4. November brought a surprise jump in existing-home sales, sparking turnaround hopes for 2024. This plus lower rates raises optimism.
5. Affordability strains will remain pronounced due to high prices and mid-6% rates, causing many to delay homebuying, especially first-timers per Fannie Mae.
6. Foreclosures are increasing nationally but a 2024 surge seems unlikely thanks to a strong economy, low unemployment, steady wage growth, and lender relief programs.
7. While localized price declines are possible, a housing crash is improbable given homeowner equity and demand from entering Millennials. Caution is still advised in investor-driven markets.
