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What’s in Store for the Rest of 2024 in the Real Estate Market

What’s in Store for the Rest of 2024 in the Real Estate Market

As we head into the final months of 2024, it’s clear that the real estate market has already had quite the ride. From rising interest rates to shifting home prices, homeowners, buyers, and investors have been on their toes trying to predict what’s next. Whether you’re looking to buy, sell, or invest, understanding the market’s trajectory is crucial.

So, what does the rest of 2024 hold for the real estate market? Will home prices continue to rise? Will interest rates drop? Let’s break down the key trends, challenges, and opportunities that you should keep an eye on as the year closes out.

1. Interest Rates: Will They Hold Steady or Drop?

Interest rates have been a hot topic all year. The Federal Reserve has been on a mission to combat inflation, which has led to higher mortgage rates. As of now, mortgage rates are still hovering around the 7% mark for 30-year fixed-rate loans. This increase has priced some buyers out of the market and caused many potential sellers to stay put in their current homes.

But will this trend continue? Many experts predict that rates will hold steady for the remainder of 2024, with the potential for a slight drop toward the end of the year. While we might not see rates dip back to the low levels of 2020 and 2021, there is hope for a bit of relief for buyers. The Federal Reserve’s approach will be critical. If inflation shows signs of cooling, we could see rates inching downward.

Action item: If you’re considering buying a home, keep an eye on interest rate forecasts. Locking in a rate now could save you from any unexpected increases later in the year.

2. Home Prices: Stability or Decline?

One of the most significant questions for the real estate market in 2024 is whether home prices will continue to rise or start to level off. Over the past few years, prices have skyrocketed, fueled by a combination of low supply, high demand, and low interest rates. However, as interest rates rise, the affordability crisis has caused a slowdown in price growth.

Many real estate experts predict that the rest of 2024 will see relatively stable home prices. While some areas might experience a slight decline, particularly in overheated markets, others might continue to see modest appreciation. This stabilization is good news for buyers who have been waiting for the right time to jump into the market.

Action item: If you’ve been waiting to buy a home, now could be a good time to start your search. Prices are expected to remain stable, which could mean less competition and more negotiating power.

3. Housing Inventory: Still Tight, but Improving

One of the biggest challenges of the real estate market in recent years has been the lack of inventory. Simply put, there haven’t been enough homes on the market to meet demand. This low inventory has driven up home prices and created fierce competition among buyers.

Fortunately, there are signs that inventory levels are starting to improve. New construction is ramping up, and more homeowners are putting their homes on the market as they adjust to the reality of higher interest rates. However, inventory is still tight, and it’s unlikely that we’ll see a significant increase in supply by the end of 2024.

Action item: If you’re a seller, this is still a great time to list your home. While inventory is slowly improving, the market is still competitive, and you could benefit from motivated buyers.

4. Affordability Challenges Persist

Despite the potential for more stable home prices and a slight drop in interest rates, affordability remains a significant issue in the 2024 real estate market. Home prices are still high compared to historical norms, and rising mortgage rates have made it harder for many buyers to afford the homes they want.

This affordability crunch has particularly impacted first-time buyers, who are finding it increasingly difficult to save for a down payment and qualify for a mortgage. In response, some buyers are turning to creative financing solutions, such as adjustable-rate mortgages (ARMs) or co-buying with family or friends.

Action item: If you’re struggling with affordability, consider exploring alternative financing options. An adjustable-rate mortgage or co-buying arrangement could make homeownership more attainable.

5. The Rise of Secondary Markets

As home prices in major cities like New York, San Francisco, and Los Angeles remain high, many buyers are looking to secondary markets for more affordable options. Cities like Austin, Nashville, and Denver have seen a surge in demand as buyers seek out lower prices and a better quality of life.

This trend is expected to continue throughout the rest of 2024, as remote work remains popular and more people seek out homes in smaller, less expensive cities. These secondary markets are benefiting from an influx of buyers who are priced out of major metropolitan areas.

Action item: If you’re open to moving, consider exploring secondary markets where home prices are more affordable. You might find a great deal in a city that offers a lower cost of living and a high quality of life.

6. Rental Market: Higher Rents, Higher Demand

As homeownership becomes less affordable, many people are turning to the rental market. This increased demand for rentals has led to higher rents in many cities. According to recent data, rental prices have risen significantly in 2024, and this trend is likely to continue for the rest of the year.

For investors, this is a golden opportunity. With high demand for rental properties, investing in real estate as a landlord could provide a steady income stream. However, for renters, the rising cost of rent is making it more difficult to save for a down payment on a home.

Action item: If you’re an investor, consider purchasing a rental property to take advantage of rising rents. For renters, it’s more important than ever to create a solid budget and savings plan to prepare for future homeownership.

7. Impact of Economic Uncertainty

Economic uncertainty is always a factor in the real estate market, and 2024 is no different. Inflation, supply chain disruptions, and geopolitical events all play a role in shaping the housing market. While some economists predict a soft landing for the economy, others warn of a potential recession that could impact housing demand.

That said, real estate has historically been a stable investment during times of economic uncertainty. While other markets may fluctuate, real estate tends to hold its value over time, making it a safer bet for long-term investors.

Action item: If you’re considering investing in real estate, keep an eye on economic indicators. While no one can predict the future with certainty, understanding the broader economic landscape can help you make informed decisions.

Conclusion: Navigating the Real Estate Market for the Rest of 2024

The rest of 2024 promises to be an exciting time for the real estate market. While we may not see the dramatic price increases or rate drops of years past, there are still plenty of opportunities for buyers, sellers, and investors alike. Stable home prices, improving inventory levels, and the rise of secondary markets all provide hope for those looking to enter the market.

For those dealing with affordability challenges, creative financing options and exploring more affordable markets can offer solutions. And for investors, rising rents and economic uncertainty make real estate a strong option for long-term gains.

Whether you’re buying your first home, selling a property, or looking to invest, the key is to stay informed and prepared. By keeping an eye on interest rates, inventory levels, and broader economic trends, you can make smarter decisions and navigate the real estate market with confidence.

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