The housing market has been red-hot in recent years, with home prices skyrocketing and inventory levels at record lows. However, as we head into 2024, there are a number of factors that could impact the market. We discuss some of the biggest factors impacting the market over the coming year and what the housing outlook may look like.
One of the biggest factors that will impact the housing outlook is rising interest rates. The Federal Reserve has been raising interest rates in an effort to combat inflation, and this is making it more expensive to borrow money to buy a home. According to Dr. Lawrence Yun, Chief Economist for National Association of Realtors® (NAR), mortgage rates will likely rise to around 8% by the end of this year but should settle down to around 6% by the spring. As for Dr. Yun’s rationale for his prediction about the 30-year fixed rate, they are as follows:
- Rental prices will settle down, which in turn will bring down the Consumer Price Index (CPI). This would likely lead to a pause of interest rate hikes by the Federal Reserve.
- Community banks that have been suffering from high interest rates will get some relief.
- The spread between the government borrowing rates and mortgage rates will return to normal. (They are currently at an abnormally wide spread.)
Although housing inventory has been and will continue to be a challenge in 2024, it is expected to improve some. Of course, the trend of more Americans moving to Florida is expected to continue to persist. Even though some areas of the state have seen relatively stable inventory levels, the increased demand from buyers moving to The Sunshine State has diminished this inventory. Needless to say, this persistently tight inventory is expected to keep home prices relatively stable at the current high levels seen in this housing market.
If you are considering buying or selling a home in 2024, it is important to work with a qualified real estate agent who can help you navigate the market and make the best decisions for your individual needs. If you are in the South Florida area, our team at Live South Florida Realty, Inc. can help! In addition, be sure to download the free Florida Home Search app for your smartphone or tablet!