Mid-Year Market Update for 2024: What Buyers and Sellers Need to Know
Greetings, Hancock Park! Johnathan Gipson here, your friendly neighborhood real estate agent. It’s mid-2024, and the housing market is as exciting as ever. Let’s dive into what’s been happening and what it means for you.
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Mortgage Rates: The Waiting Game
Remember last December when the Federal Reserve hinted at lowering rates? Analysts were hopeful, predicting mortgage rates might drop to a cozy 6%. Fast forward to now, and we’re still hovering around 7% thanks to persistent inflation. It’s like waiting for rain in LA—sometimes it just doesn’t happen when you want it to.
Despite the high mortgage rates slowing down home sales, there’s a silver lining for buyers. Nationwide, the inventory shortage is easing, and more starter homes are coming on the market. This slight increase is helping to slow down the rapid rise in home prices, offering some relief.
Sellers, on the other hand, are starting to adjust to this new rate environment. More properties are being listed, which is great news. Economists suggest that the persistent housing deficit, combined with tighter lending standards and historically high home equity levels, will help keep the market stable. So, what does all this mean for you? Let’s break it down.
Mortgage Rate Cuts: Delayed but Not Denied
On May 1, the Federal Reserve decided to keep its overnight rate at a 23-year high due to ongoing inflation. While mortgage rates aren’t directly tied to the Fed’s rate, they often move in tandem. So, the Fed’s decision means we won’t see a significant drop in mortgage rates—or a real estate market rebound—as soon as we’d hoped.
“The housing market has always been sensitive to interest rates. When rates go up, we see less activity,” said Danielle Hale, Realtor.com’s chief economist. She’s right—many people hold their low mortgage rates like a rare collectible. First-time buyers are also feeling the pinch from high prices and borrowing costs.
Experts now speculate that the first-rate cut might come as late as September. Rick Sharga, CEO at CJ Patrick Company, predicts, “We’re not likely to see mortgage rates drop significantly until after the Fed makes its first cut. And the longer it takes, the less likely we are to see rates below 6.5% by year-end.”
Buyers Gaining Options: Sellers Return to the Market
Good news for buyers: More homeowners are putting up “For Sale” signs. After record-low inventory levels, this presents a great opportunity for buyers to find a home they love—and maybe even get a good deal.
In 2023, inventory was scarce as homeowners held onto their mortgage rates. However, a recent survey by Realtor.com shows that more owners are ready to sell. While many still feel “locked in” by their current mortgage, the share has slightly decreased (79% now versus 82% in 2023). Nearly one-third of these “locked-in” owners say they need to sell soon for personal reasons, and the vast majority (86%) have been thinking about selling for over a year.
Optimism is also creeping back into the market. “Both our ‘good time to buy’ and ‘good time to sell’ measures continued their slow upward drift this month,” noted Fannie Mae Chief Economist Doug Duncan. However, the current stock still falls short of pre-pandemic levels. “For the first four months of this year, the inventory of homes for sale was at its highest level since 2020. But it’s still down 35.9% compared to typical 2017 to 2019 levels.”
Home Prices: Rising at a Manageable Pace
Good news for buyers: The national median home price has remained stable over the past year, thanks to more affordable homes hitting the market. Sellers are also adjusting their pricing expectations. In many regions, just 12% anticipate a bidding war (down from 23% last year), and only 15% expect to sell above list price (versus 31% in 2023).
But don’t expect a fire sale. According to Realtor.com’s April Housing Market Trends Report, “On an adjusted per-square-foot basis, the median list price grew by 3.8%, as homes retain their value despite increased inventory.”
Dr. Selma Hepp, chief economist for CoreLogic, predicts that home prices will keep rising at a gradual pace through 2024. “Spring home price gains are off to a strong start despite mortgage rate volatility. More inventory means more options for buyers and fewer bidding wars, which keeps price growth in check.”
The American Dream: Alive and Well
Surveys show that the dream of homeownership is strong, despite financial challenges. A recent poll by Realtor.com found that 55% of Millennials and 40% of Gen Z respondents believe now is a good time to buy a home. According to Fannie Mae Chief Economist Doug Duncan, buyers are adapting to the new economic reality. “With historically low rates behind us, some households are moving past last year’s rate hike, which could help thaw the housing market.”
The Realtor.com study also revealed that even a small drop in mortgage rates could significantly boost demand. 40% of buyers would find a home purchase attainable if rates fall below 6%, and an additional 32% would enter the market if rates dip below 5%.
Determined buyers are using various strategies to make homeownership more affordable, including shopping multiple lenders, purchasing discount points, and opting for adjustable-rate mortgages. More than three-quarters hope to refinance to a lower rate in the future.
What Does This Mean for You?
For Buyers:
If you’ve struggled to find a home, now might be the time to try again. With more inventory and less competition, it could be the perfect time to make a move. Reach out if you’re ready to start your home search.
For Sellers:
Thinking about selling? Now’s the time to act. As inventory grows, it’ll be harder for your home to stand out. We can craft a plan to maximize your profits, starting with a professional assessment of your home’s current market value. Contact us to schedule a free consultation.
I'm Here to Guide You
While national housing reports give us the big picture, real estate is local. As your local market expert, I know what’s likely to impact sales and drive home values in Hancock Park. Whether you’re considering buying or selling a home in 2024, contact me to schedule a free consultation. Let’s work together to craft an action plan that meets your real estate goals.
Remember, I’m here to help you navigate the market’s twists and turns. Let’s make the second half of 2024 a successful one!
Sources:
CBS News
Bankrate
Fannie Mae
Realtor.com
Bankrate
NPR
Realtor.com
The Mortgage Reports
Fast Company
Realtor.com
Fannie Mae
CoreLogic
Realtor.com
US News & World Report