Real Estate Housing Market Forecast

US resale home sales have dropped to their lowest level since 2010.

The lagging effect of fast-rising mortgage rates, mortgage rate lock ins, and tougher loan qualification has stopped first-home buyers from entering the housing market, and homeowners are locked in at previous lower mortgage rates and can’t sell.

The result of the high FED rate and regulation is a sagging real estate market with low inventory and handcuffed buyers. For Realtors, home buyers, home sellers, and investors, it’s difficult to create a sales transaction. However, it’s believed that potential buyers have down payments and are only waiting for mortgage rates to fall.

Unfortunately, that may not happen in 2024, and as home prices rise further it might be a blessing for some buyers willing to risk buying in such unfavorable circumstances. It appears a recovery might not happen until after the November 2024 election. Rumors have it the FED might even raise the central bank rate even further upward.  However, it is supply scarcities that are driving the price of homes, rent, food, and energy upward.

Although the multifamily market has been booming in construction, it’s not expected to make a difference beyond 2024.

Lingering inflation and re-inflation will be the topic for 2024 as the economy recovers from the high FED rate.

Key Takeaways from this Report

The takeaway in this report might be in patience, preparation, and financial management for buyers. Home prices likely won’t fall, given the shortage, demand from Millennials, and due to the fact that as rates fall, more buyers will enter the market to bid up prices.

More baby boomers ‚ wealth continues to be transferred to their Millennial-aged children, added to common bank of mom and dad assistance, thus providing more funds to chase after homes, new or resale.

Today’s market is dominated by Millennial-aged buyers who are in their family formation years and who need to move out of apartments and into a larger home.  Gen Z’s too are growing in numbers and will likely bid on condos and smaller homes as they enter the family formation phase of their lives.

Market Forecast

Recession will be mild and home prices will not fall. In fact, we could prices resurge in the spring.

Zillow (August forecast revision) has revised its housing market forecast and they predict home prices will rise 5.8% by year end 2023. They see home values will rise 6.5% during the July 2023 to July 2024 period.

They forecast 4.2 million existing home sales this year which will be 17% less than last year.

Zillow Home Price Forecast to 2024. Screenshot courtesy of Zillow.

Homes Prices and Sales in September

Single-family house sales declined 1.9% to 3.53 million units seasonally adjusted on a yearly basis, while condo townhouse sales fell 2.3% to 430,000 units. Existing-home sales prices are up 2.8% year over year to $394,300, down from August’s median price.

Despite the soaring prices, total housing inventory by the end of the month edged 2.7% higher to 1.13 million, equivalent to 3.4 months’ supply at the current sales pace

30 year mortgage rate USA. Screenshot courtesy of TradingEconomics.

US Existing Home Sales. Screenshot courtesy of TradingEconomics.

US Existing Home Prices. Screenshot courtesy of NAR.

US Existing Home sales slide. Screenshot courtesy of NAR.

Zillow’s latest report on housing for September show home prices reached record highs at $309,041, a 2% gain from September of 2022.

14.8% fewer newly pending listings happened in September vs last year (after a 18.9% year-over-year dip in August).  New listings dipped 6.4% from August to September (-9.3% from last year, vs. a 12.7% year-over-year decline in August).

Home prices were up from year-ago levels in more than half (31) of the 50 largest metro areas. Austin, New Orleans, Las Vegas and Phoenix suffered the biggest price drops year over year.

City by City Home Price Growth. Screenshot courtesy of Zillow.

Rental Market Easing Slightly

As so many buyers can’t find a home or condo to buy, they are forced to continue in the rental market. And while a rising glut of new multifamily properties are appearing, it’s expected that this glut will be absorbed within a year.  The fact, America (UK, Australia, Germany, Canada) are undersupplied and new construction.

Rent Growth last 12 months USA. Screenshot courtesy of Zumper.com.

NAR Housing Market Report for September 2023

NAR Chief Economist Lawrence Yun warned that „The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.“

Single-family and Condo/Co-op Sales

US single-family house sales declined by 1.9% slipped 1.9% from August, and are down 15.8% from 12 months ago. The median existing single-family house sold at $399,200 in September, which was up 2.5% from September 2022.

Existing condominium and co-op sales fell 2.3% from August and are down 12.2% from one year ago. The median existing condo price rose 6.8% to $353,800 in September, from $331,300 12 months ago.

Overall, home and condo prices haven’t retreated significantly from their 2022 peaks. It reflects the amount of cash that US consumers have via the stimulus spending, and that wealthy Americans are more than able to buy.  The retreat and absence of foreign buyers has helped to ease demand and upward pressure on price. The rising US dollar is making that retreat lasting.

Regional Home Sales

Regionally, the Northeast is seeing a surge in sales and prices. Home sales in the Northeast rose 4.2% vs August yet are well down (-16.7%) from 12 months ago. Median resale price in the Northeast rose 5.2% year over year to $439,900.

The Midwest saw existing-home sales fall 4.1% vs August, and that was down 18.4% from one year ago. Midwest home prices rose 4.7% year over year to reach a median of $293,300.

In the South region, home sales fell 1.1% from August, and this down 11.7% from September of 2022. Median prices rose 3.1% YoY to $360,500.

And in the West region, existing-home sales fell strongly by 5.3% from August and that is 19.3% from one year ago. Still the median price of home in the West rose 1.8% YoY to $606,100. Lawrence Yun explained this sudden large sales drop was simply due to unsustainable price increases.

See more the California housing market report.

Single Family House Sales

Single-family home sales jumped 6.5% to a seasonally adjusted annual rate of 5.76 million in January, yet this is still 2.4% less than January 2021.  The median resale single-family house price rose 15.9% YoY to $357,100 in January.

Existing condominium and co-op sales leapt up 8.8% to 740,000 units in January. Yet that is 1.3% lower than one year ago. The median existing condo price rose 10.8% to $297,800 last month YoY.

Shrinking Home Supply Effect

properties typically remained on the market for 21 days in September, up from 20 days in August and 19 days in September 2022. Sixty-nine percent of homes sold in September were on the market for less than a month.

Housing permits are on the rise again this year, however completions are lagging due to labor, Covid shutdowns and materials issues.

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Strong consumer confidence and lower rates (3.72% for 30 year fixed rate mortgage) are encouraging buyers to buy higher priced homes.

Enjoy all the insight and data from Hud, NAR, US Census Bureau, NAHB, Trading Economics, Freddie Mac, Attom Data Solutions, Zillow, from today’s most credible housing information sources.

See the city housing market reports for San Jose, Los Angeles, San Francisco, Phoenix, Chicago, Denver, Oakland, Honolulu, Las Vegas and for California’s housing market. See below for mortgage rate forecasts and discover the full benefits of the best property management software.

Is This the Right Time to Buy a Home?

If you’re hoping to time the purchase of a home, are deciding on whether you should buy a second home or rental income property, feel uncertain about the economy, and mapping out your future, you’ll find these real estate market insights valuable.  It may be the right time to buy in most cities, while in some, perhaps not.

In this well viewed chart from Zillow Research, you can see an upward trend in home prices. Zillow calls the market hot and expects average home prices across the country to reach $250,000 next year.

Housing Price Changes Over Time

Nationally, there are some surprises in housing prices.  In this chart, courtesy of Kiplinger research, prices in San Jose have jumped 130% since the recession bottom, while Denver, Seattle, San Francisco, Los Angeles, and Las Vegas home prices have doubled as well. Honolulu, New York, Boston, and Washington are a few cities that haven’t seen a full recovery.  Property investors: please check out the best online property management software that smart individual investors are using.

Property Management: if you’re a Realtor, Landlord or Property Manager, please see our posts on multifamily, rental property markets, and on trends in Proptech, growing asset value, and adopting cloud software and automation, improve your property income strategy and investment ROI.

Simplified Property Management Software

For landlord investors, margins are shrinking.  And as rent revenues decline, operations budgets shrink, rent collection is tougher, and costs of labor and materials remain high, business must be streamlined. Many landlords and property managers will review their business models, and begin to cut expenses.

To really manage 2024’s business challenges, a new focus on technology and the best property management software is needed.  Software technology is the only tool that has the potential to retain tenants, maintain asking rents, and focus spending on the essentials.

Should I Buy a Home This Year or Wait?

Buyers and renters are asking whether they should buy now or wait. Their decision is one thing, yet mortgage financing will have the biggest impact on whether renters can become buyers. Low mortgage rates and rising income will cause many to take the home buying leap, this summer.

Is it a Good Time to Buy a Home?

No, it’s the worst time to buy a house or condo. Even for a landlord looking for rental income, the price and financing challenge, plus declining rents make it unwise.  Yes, rental property businesses are the best, but only for those with current properties financed at lower mortgage rates. Landlords report they are doing well, but concerned about economic trends.

Factors that make it a bad time to buy:

• persistent high home and condo prices
• high interest and mortgage rates
• Millennials and Gen Z’s bidding up prices with mom and dad help
• international wars and terrorism increasing quickly
• poor selection of homes available
• renting is much less costly than buying
• inflation persists
• unemployment rising slightly

Millennials Driving the Market

Sales numbers from Freddie Mac and Fannie Mae, show most loan originations are from Millennials who are finding more starter homes to buy. With more Millennials hitting their family forming, home buying years, they’re outpacing even Generation X’s previous record home buying numbers. Millennials took out 45% of all mortgages last year.

Best Cities to Buy a Home?

The stats show mid-sized cities across the nation are growing in popularity, with improving economies and migration. These locations may give resistant sellers (Generation X and Babyboomers) a destination to move too. That’s an important factor for homeowners.

Learn more about: Property Management Software and HOA Software.