2024 Real Estate Crystal Ball Gazing

Despite challenges like high mortgage rates, home prices, and low inventory levels, the housing market still presents excellent opportunities for those looking to buy or sell their homes. 

According to the National Association of Realtors (NAR) in this article, the national median existing home price for all housing types in October was $391,800, an increase of 3.4% from October 2022 ($378,800). And Bankrate states, “For today, Friday, November 24, 2023, the current average 30-year fixed mortgage interest rate is 7.74%.

Curious about where these trends may go? Realtor and CEO of Ginger Baxter Group, Ginger Baxter, offers a few suggestions to watch out for in the 2024 West Michigan Real Estate market. Here’s what she has to say.

Ginger Baxter: When considering the housing market, the two main factors are affordability and inventory. These factors are closely related because inventory affects housing prices. Usually, the lower the inventory number, the higher the prices, with the seller holding the upper hand.

According to our local MLS, homes spent an average of 66 days on the market in Kent County in October 2023. So you can see homes are moving at a steady rate.

If you bought your average home ($336,550) in Kent County one year ago, you would have paid over $40,000 less for it than someone buying the same home today ($376,732.) This time last year, people were concerned with the housing market, and yet they would still have been ahead if they had taken action instead of waiting out the unknown.  

NAR’s 2023 Profile of Home Buyers and Sellers – released earlier this month – found that first-time buyers were responsible for 28% of sales in October, up from 27% in September and identical to October 2022. So, it’s clear that people are still entering the housing market for the first time, which is great.

In Kent County, we have an absorption rate (If no new properties were added to the market, and sales continued at a steady pace, the Absorption rate indicates the number of months required to sell all the properties on the market.) for the end of October of 1.99. So, almost two months of inventory in the market. Kent County was definitely a seller’s market in October 2023, meaning more people were looking to buy than homes were available.

An alternative to buyers in this low inventory market could be new home construction. According to US News, “homeowners may be reluctant to sell and sacrifice their low mortgage rates, but home builders remain eager to close the deal. Although new construction homes are typically more expensive than resale homes, builders may be willing to offer other concessions like price reductions or temporary interest rate buydowns.” 

And, of course, homebuyers and homeowners want to know if mortgage rates will go down in 2024? That is the wild card in all of this.

Predictions are nice, but forecasting mortgage rates is nearly impossible. After all, mortgage rates are driven by markets. And markets are unpredictable. But if we look at industry leaders who have been predicting markets for a long time, it’s a safe bet that they can help us understand what to expect.

NAR expects mortgage rates to gradually decline to 6.3% by the end of 2024, the trade association predicts in its October Economic Outlook. “This decline in mortgage rates will be a welcome relief to homebuyers, and potential sellers and consumers on the sidelines are very likely to rebound into the market at that time,” says NAR deputy chief economist Jessica Lautz in an October 26 statement.

Homeownership is still an excellent investment for most people. Homes tend to appreciate in value over time and help create generational wealth. According to this article from Money, some of the advantages to consider if you are wondering if home ownership is still worth it are:

• The property value should appreciate over time

• You gain home equity as you pay down your mortgage

• Interest paid on a mortgage is tax-deductible

• It can be a source of rental income and increase cash flow

The real estate market will continue to be stable in 2024 with the hopes of reduced mortgage rates, which in turn will open up more inventory. 

Seize the opportunity in 2024! With anticipated reduced mortgage rates, now is the perfect time to make your move. Whether you're buying or selling, our team of seasoned real estate professionals is ready to guide you through the process. Contact us and turn your real estate goals into reality!