Pasadena Real Estate Report
Thinking about making a move in 2024, but not sure if now is the right time? Let me give you my predictions for the housing market as we enter the new year, and help you make an informed decision.
The demand for housing surged in 2020 following the COVID-19 pandemic when interest rates hit record lows and lockdowns forced many to reconsider their living situations. The last couple of years however, have been dramatically different, as interest rates and home values shot back up in dramatic fashion.
As a result, 2023 home sales fell to numbers we haven’t seen since the housing crisis of 2008. It’s important to note that the infamous crash in 2008 was caused by predatory mortgage lending, unregulated markets, and massive amounts of consumer debt. The decline we recently experienced is the aftermath of a global pandemic and the decisions made during the state of emergency.
Mortgage rates will drop to 5%
The Fed recently announced that they will not only be holding off on any additional rate increases, but expect to start making cuts later this year. That announcement alone has caused current mortgage rates to drop from an average of 7.79% in late October, down to 6.62% as of January 4th, 2024.
My prediction is that interest rates will continue to fall and we’ll see rates averaging around 5% as we hit the spring and summer markets.
As interest rates fall, we’ll see a couple of things happen…
The number of home sales will increase
First, many homeowners who were on the fence about selling their home will start to feel more confident about listing their property for sale. Although new construction homes being sold gained market share over the last year, these resale homeowners are responsible for a majority of the total housing inventory.
My prediction is that we’ll see inventory levels rise this spring, but quickly get absorbed. I also believe we will see an influx of homes hitting the market from the Baby Boomers who are looking to downsize or relocate out of state.
Competition will drive up home values
Second, we’ll see more home buyers enter the market as monthly payments become more affordable. However, many home sellers are also home buyers. As the supply of homes increases, so will the demand.
My prediction is that we’ll see a housing market very similar to 2021 where multiple offers are the norm, which will result in home prices continuing to rise. Those buyers who know how to build a winning offer will be the ones to come out on top. A slowdown isn’t coming any time soon, and home prices will never be as low as they are today.
Thousands of Realtors will exit the industry
Last year wasn’t just difficult for homebuyers facing interest rates that topped out around 8%. With the refi-boom ending, fewer transactions taking place, and recent lawsuits against the NAR, many industry professionals including mortgage lenders and real estate agents found themselves looking for new employment.
The National Association of Realtors lost 17,489 members from November to December of 2023 alone. Although consumers have access to more information today, the increased volume and velocity can become overwhelming and lead to confusion and decision fatigue. This is where working with an experienced real estate professional is helpful.
My prediction is that we will continue to see more real estate professionals leave the industry this year, giving market share back to those agents who are providing more value and a better experience for their clients. The Realtors who remain will still play a critical role in the real estate transaction process for the majority of home buyers and sellers.
2024 will be a good year for the U.S. economy
Most people move because they have to move. Sometimes they get lucky buying low and selling high, or getting a 2.75% interest rate. Normally, it’s extremely difficult, if not impossible, to time the real estate market. However, this is an election year, which means everyone seeking election wants to look good and keep the people happy.
This has me optimistic that 2024 will be a year with less volatility, and hopefully lead to more opportunities for those who have weathered the storm of a post-pandemic world, including myself!
James Bowerman is a licensed real estate agent in Pasadena, MD with the Real Creative Group of Compass.
