A Look Ahead What will 2024 bring to the real estate market in the Inland Northwest? By Ben Geanetta, REALTOR®, Team Lead
The 2023 housing market and its unpredictability was a real head-scratcher. To describe it with a dash of humor, you might say it's like trying to herd cats during a Fourth of July fireworks show—an entertaining yet utterly unpredictable endeavor.
Keeping that in mind, if someone claimed to fully understand the housing market in 2023, they were either chasing that cat or were caught in a whirlwind of mood swings. I'll admit, I was caught in that storm based on how long the buyer window was going to stay open. I say this because the housing market of 2023 witnessed the convergence of troublesome global events and a market that presented itself as a perplexing puzzle, gibberish ... completely unfamiliar and nonsensical. Once you thought you had a beat on it, the market made a U-turn.
But let's not get overwhelmed by the chaos, and let's not allow ourselves to be distracted by all the commotion. In this article, we are about to dive into the perplexing housing market and what 2024 will likely look like. To do so, we will briefly reflect on how we got to where we are to hopefully determine where we are headed.
Trip Down Memory Lane. I want you to take a deep breath as I take you back on a time-travel journey to the pre-COVID days; a time when the housing market was on a 10-year streak that was as consistent as a well-oiled machine. It was a healthy, steady climb with no market dips, and the memories of the 2008 mortgage meltdown were fading into history. The economy was flourishing, and then ... enter the pandemic, and suddenly, a wave of fear swept across the country like wildfire.
In the Inland Northwest, it wasn't just fear; it was families from out of state seeking a taste of political freedom. It was urban dwellers wanting self-sustainability and a chance to turn back the clock, immersing themselves in nature. The result? A monumental surge in demand that was nothing short of a bidding war at a car auction.
But here's the kicker. That demand didn't hit the brakes for two long years! The market was hysterical, and I can't imagine ever experiencing that type of hysteria again. As the pandemic's hold on our lives weakened, you might have anticipated a slowdown in the housing market. And it did, to some extent. Let me explain. One of the few positive outcomes of COVID-19 was the rise of remote work. As families realized they were not bound to concrete jungles, the concept of "zoom towns" gained popularity. These are places with a desirable combination of population size, proximity to recreational activities, and resorts that define the ideal place to live. These towns continued to be in high demand, which helped maintain high home prices.
So, we ended up with a housing market that defied gravity, and we found ourselves in a real estate rope-a-dope scenario. The culprit? Lack of inventory. Many homeowners with low mortgage rates are caught in a situation I call "locked in." Meaning these homeowners are stuck with a house due to the low mortgage rate and can't afford to trade up, take a job transfer, or any number of life events due to their historic low mortgage rate.
What the Rate? Relief Brings a Frenzy. Now that we've taken a delightful journey through the twists and turns of how we ended up where we are today, it's time to roll up our sleeves and dive into the crystal ball of housing market predictions. After a deep dive into the numbers, here's the scoop: Home prices are set to keep climbing, mortgage rates are going to take a breather and become a bit more budget-friendly, and the competition to snag your dream home is about to heat up.
Predicting sustained higher mortgage rates through quarter one of 2024 might sound like a dull financial forecast, but let me tell you, it's like watching a rollercoaster that's stuck at the peak—thrilling in its own way. You see, these higher mortgage rates are about to play a real estate role in 2024. As we just discussed, inventory is the number two reason why prices have remained high. The number one reason is the rates. When rates finally dip into the 6 percent range, it'll be like the rollercoaster finally taking off, and home buying and selling will kick into high gear. I've got clients who are already doing the happy dance because they locked in the mid-6 percent rates, which is a steal compared to the 8 percent nightmare we've experienced in much of 2023. This is a great indicator of things to come.
But guess what? When rates drop below 6 percent and creep back into the 5 percent range, that's when the real estate frenzy begins, like a Black Friday rush for homes. I've got my bets on summer 2024 for that moment, and as rates come down, home prices will climb, making it a wild ride in the housing market!
The Wild Card, but So Wild. Now, I can almost hear the collective worry in your minds—what's the deal with foreclosures? With inflation running wild, one might expect foreclosures to skyrocket, especially since forbearance is over, and those payments are knocking at the door. But here's a twist that's straight out of a plot twist playbook: U.S. mortgages in serious delinquency, where borrowers are three months late on payments, have plummeted to the lowest level in nearly 25 years, sitting at a mere 0.9 percent. Nationwide, overall mortgage delinquencies and foreclosures are also hanging out near historic lows at 2.6 percent and 0.3 percent, respectively (courtesy of the Sherlock Holmes of real estate data, CoreLogic).
It's like finding out that the neighborhood lemonade stand is now a thriving multinational corporation. This is a clear sign that most U.S. homeowners are handling their monthly payments just fine, defying the foreclosure fear with impressive strength.
Employ a Winning Strategy. As the housing market evolves in 2024, the landscape is changing for first-time homebuyers, giving way to cash buyers and those trading up. These experienced buyers often have the advantage of greater flexibility in their offers, while first-time buyers often face more constraints. Furthermore, first-time homebuyers find themselves in a competitive arena, not only contending with each other but also with cash buyers. For sellers, the allure of cash in hand is like the aroma of freshly baked cookies on a lazy Sunday afternoon—irresistible.
As the market continues its unpredictable journey, it becomes paramount for all parties involved—both buyers and sellers—to engage in consultations with local, experienced real estate professionals. These consultations serve as your invaluable secret weapon, providing you with crucial market insights, transaction expertise, and a tailor-made strategy that's as unique as your fingerprint. It's crucial to emphasize that the need for a consultation isn't limited to the inexperienced. Whether you've navigated multiple real estate transactions or have extensively researched online, forgoing a consultation is like setting sail in uncharted waters without a compass.
At the end of the day, if you want to buy a home in 2024 or even sell one, block out the noise, look at data directly correlated with home prices, and talk with a local real estate professional to see if it's the right time for you. I fully anticipate a more clear path for the housing market in 2024, and those who will take the time to put a strategy together with a REALTOR® will achieve their real estate goal instead of kicking the can down the road.
