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For any kind of real estate investor, knowing how the housing market is going to behave is a big thing.
It is essential to know whether it is a seller's market, a buyer's market, or simply time to hold your properties.
However, since the real estate market depends on so many factors, it can be difficult to pinpoint exactly what is going to happen in the coming year.
Instead, we can come up with a set of predictions and forecasts that may come close.
In this guide, we will be doing exactly that. We will be going over the predictions and forecasts for how the US housing market will behave in the year 2024.
To begin, let's go over how the markets are currently doing in the United States.
US Housing Market Overview
Before jumping into the predictions and forecasts for the markets in 2024, it's important to take a look at how they are actually performing right now.
We will be going over metrics like median home prices, mortgage rates, housing inventory, and much more.
US Home Prices
The first thing that we will be taking a look at is the home prices in the United States. For this, we will be using something called the median home price. The median price represents the middle point for real estate prices.
It is important to note that this is not the same thing as the average price. The median is the actual middle of the data set, not the average.
The median home value in the US in the fourth quarter of 2021 came out to be around $408,100. This is an increase of about $50,000 from the fourth quarter of 2020.
However, the actual median sale price is only around $376,197. This is a whopping 14.2% larger than the year before, hovering at around $320,000 in the year 2021. Even more astounding, this is an almost $150,000 home price growth from the median sale price five years ago. Later in this guide, we will be going over the reasons for these rising prices and how housing prices can change in the coming year.
US Real Estate Listings
In January of 2022, the nationwide median listing price for active listings was around $375,000. This is an increase of around 10.3 percent from the last year and an impressive 25% from January 2020.
Most notably, in large metros like Los Angeles, the median listing prices grew by 6.1% compared to last year. Also, the housing inventory, in general, is down 28.4% from the previous year. This is an extreme change and is part of the driving force increasing the housing demand. Even more incredible, the inventory of active listings is down 60.4% compared to the figures before the pandemic began.
This downward trend in existing home sales and listings has made the lives of homebuyers a pain. This low inventory paired with rising mortgage rates and interest rates has been making it very difficult for people to find homes to buy at a reasonable price in the current housing market.
US Rent
Over the past 12 months, the rent prices in the United States have risen about 18%. Although the pandemic did put a stop to the rental market's growth, it has completely recovered throughout 2021.
It has recovered so much, in fact, that the national median rent price is now $120 greater than what experts had predicted. And, it has not shown any signs of stopping to grow. The national median has been growing by an average of 2.1% per month.
US Population
Now, although the US population is not directly linked to the US real estate market, it is still important to study. See, the population can have a sizeable impact on things like mortgage rates, interest rates, and the housing market in general.
The current population of the United States is 334,026,595. Experts agree that the population is going to continue increasing and surpass 400 million by the year 2067. This is an important figure because it means that there will be millions more people that need housing.
With more demand for housing, the supply will eventually have to keep up. If not, the price growth of the housing market will be immense.
So, now that we have a general overview of the current state of the housing market, let's get into some predictions. In the next section, we will be predicting how the US real estate market will be performing in the year 2024.
US Housing Market Predictions for 2024
Last year, homeowners witnessed a market in which they were able to sell their properties quickly and at higher prices. This was due to the ongoing supply/demand dynamics where home buyers fought to get the winning bid. That created a competitive seller's market for all of the year 2021.
Investors can only hope that this upwards trend continues into 2024, but it is still too early to tell for sure. Below, we will be going over some of the predictions for the US housing market in 2024.
Scarce Inventory/Home Price Growth
One of the nationwide issues with the current housing market is the lack of housing inventory. With homes continuing to sell at a rapid pace, the inventory continues to be constrained. However, some professionals predict that the inventory will slightly recover from the all-time lows of 2021.
In 2024, the inventory is predicted to expand by about 0.3%. Although this is a very minuscule change, it is still a slow improvement. One of the causes of this low inventory stems from the affordability challenges in the current housing market.
Many homeowners say that they are hesitant to sell their homes because they are afraid of not being able to find another home. This could begin to ease up a little with the ramping up of new constructions. But, even with an increased inventory, reasonably priced homes are still going to be selling extremely quickly in many regions.
Increasing Mortgage Rates
In the past year, mortgage rates have been consistently rising. One of the main reasons that mortgage rates rise is because of the federal reserve. This was especially true in January when the mortgage rates spiked after investors found out the FED's plan - aggressively raising interest rates in 2022.
According to the N.A.R. (National Association of Realtors), an increasing gap between supply and demand will only continue to drive up home prices. And, the mortgage rates will follow closely behind. Experts predict that the mortgage rates will continue to rise from the current 3.99%.
Regardless of the rising mortgage rates, however, the housing market is still expected to remain strong. This is due to a consistent, tight supply coupled with an increasing demand which will continuously drive up sales. Also, since buying is turning into a more cost-efficient method compared to renting, many millennials will be buying houses in 2024. This is according to Realtor.com, the real estate listings website.
Increased Rent
As mentioned before, the renter's market is going to become less cost-efficient than the buyer's market. This is because renters will be facing higher rent prices throughout 2024.
Ever since the pandemic began, rental evictions have been at all-time lows. The reason for this is that during the pandemic, there were regulations that governed evictions. These regulations essentially protected the renters from being evicted, even if they were not able to pay the rent.
Now, although the rent price is increasing, so is the rental market in general. Experts forecast a rent growth of around 7.1% in the next 12 months. This figure is slightly ahead of home price growth.
However, the eviction numbers that we just mentioned are not going to be maintained for too long. With these regulations beginning to cease, and rental markets returning to pre-pandemic policies, people may begin to struggle. So, with these renters needing to pay back their rental payments, it may look like a rental investor's market in 2024.
Increased Foreclosures
Lastly, one of the predictions that experts have a lot of confidence in is that there will be an increased number of foreclosures. Last year, the nation began to see a huge jump in the number of foreclosures. However, the numbers are still much lower than they were before the pandemic.
This is, of course, because of the government's ban on foreclosures. During this time, there were so few foreclosures because they were simply not allowed. This caused the number of foreclosures to hit an all-time low, down by about 30% from the year before.
But, by the end of last year when the ban was lifted, there was a spike in foreclosures. Just last year, foreclosures were up 102% compared to the previous year, causing a dent in the housing market. So, as mortgage lenders and renters continue to get back to the norm, we can expect to see even more foreclosures as we continue through the year.
Bottom Line
So, after reading all of this, you might be wondering if it is a good time to sell your home, or maybe a good time to buy a new home.
Already, we can see that it'll be a fierce buyer's market with some heavy competition when buying a home. Also, with homes flying off the market as soon as they're listed, snagging a reasonably priced home may not be too easy.
Also, even with the astronomically high property prices, buyers will still be up against a historically low housing inventory that will probably last through all of 2024. And homebuilders, while trying to help, cannot build enough homes to meet the crazy demand.
So, if you are a buyer looking for a home in 2024, you may be in for a rough ride. You may have to give up some of the things you want in a house, and stick with everything you need in a house.
The only bright side is that you may be able to secure a decently low mortgage rate - for now. Although they are looking good now, they are slowly inching up and will continue to do so for all of 2024.
So, make sure to speak to some real estate agents and secure those mortgage rates before they go up. Or, if you already own a house, consider selling your home now, when the inventory is so low, and get as much out of it as possible.
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