2024 Housing Forecast
2024 Housing Market Forecast
There are a number of economic indicators that we look at when trying to forecast what the real estate market will do in the next 12 months. So let’s look at each of them and see where we stand.
1. Interest Rates: Changes in interest rates can significantly impact the affordability of mortgages, affecting both homebuyers and sellers. Lower interest rates often stimulate demand in the real estate market.
POSITIVE: Coming out of a year with the highest interest rates we have seen in over 20 years. Fewer sales, fewer listings and fewer buyers all because interest rate shock was being felt. As we enter 2024, interest rates are trending down. Some economists predict we may see them drop into the low 6’s by the end of the year. While this is still a far way off from the record low rates we saw for over a decade, this is a very normal range of rates historically speaking and buyers will just need to accept that this is now the new normal.
2. Employment and Income Levels: The overall employment rate and income levels in an area can affect people's ability to buy homes. Strong job markets and rising incomes generally contribute to a healthier real estate market.
POSITIVE: We are now at 3.7% unemployment in the United States. That is back to pre Covid levels. When people are employed, they have the money to buy homes.
3. Consumer Confidence: The confidence that consumers have in the economy can impact their willingness to make significant financial commitments, such as buying a home. High consumer confidence often correlates with a more active real estate market.
POSITIVE: Consumer confidence is trending upward as we move into 2024. While it is not at pre Covid levels we are moving in the right direction.
4. Housing Starts: The number of new housing units under construction can indicate the supply and demand balance in the market. An increase in housing starts may suggest growing demand, while a decline could signal oversupply.
NEUTRAL: One of the biggest issues affecting the market the last 5 years has been lack of supply of homes for sale. Builders just can’t build fast enough to keep up with the growing number of homebuyers. The number of new homes being built has remained consistent but has not increased which leads me to believe we will continue to see multiple buyers bidding on the same home as we get into the spring market.
5. Inflation Rates: Inflation can influence interest rates and the cost of living. Moderate inflation can be positive for real estate, but rapid inflation might lead to higher interest rates, impacting affordability.
POSITIVE: Inflation rates were the driving force behind the interest rate spike. Inflation has been trending down and is now more than half the amount that we saw in 2022 and 2023.
6. Demographic Trends: Population growth, migration patterns, and demographic shifts can influence the demand for housing. Areas experiencing population growth often see increased demand for real estate.
POSITIVE: The Hampton Roads area has not seen any declines in population growth since this data started being tracked. The trend is assumed to continue moving forward. The more people the more demand for housing.
POSITIVE: Coming out of the inflation years the stock market has switched over from a bear market to a bull market. This is a positive for the housing market.
All signs point to a good year in real estate. Great time to sell. Good time to buy as interest rates continue to dip. We just need more inventory which is where you can help. Have you wanted that bigger home with a pool? Perhaps you need to downsize and get rid of the huge yard and costly maintenance bills. We can help with that. Give us a call.