2024 has been an odd year in the Real Estate Market. We started with such hope that the Federal Interest Rate and Mortgage Rates would start to come down in time for the Spring Real Estate Market. When rates didn't change (and mortgage rates actually increased), the real estate market has stalled out a bit in the 2nd quarter. In this episode we explain what has happened, how we're helping our clients adjust, and what's coming.
2024 in Nutshell
As we entered 2024 we were expecting a rebounding Real Estate Market. Economists were predicting Federal Interest Rates to drop a few times beginning in March or April. However, unfavorable inflation numbers caused the Federal Reserve to hold off on dropping those rates indefinitely. Most Real Estate industry leaders were also predicting mortgage rates to start dropping around the same time with a steady decrease over 2024.
Neither of those things happend as predicted. Consumers were expecting positive news in the Spring and when that didn’t happen they pulled back from spending and did not provide the usual boost to sales we typically see in a Spring Real Estate market. Mortgage rates actually increased over the 2nd quarter making home affordability more difficult. The market begin to pivot around May 2024 and has been slower than anticipated in the 2nd quarter.
The resulting slow down affected Sellers by increasing the number of days a typical home sits on the market before selling and pricing expectations have also come in lower than expectations. Since the cost of borrowing has increased along with insurance premiums (due to recent weather events) and general inflation buyers are taking a cautionary approach to spending.
To be clear, buyers are still in need of housing and we still face a housing shortage. The past 5-6 years have been such a “Seller’s Market” that we are adjusting to what we call the “New Normal.'“ Actually, this is a pretty typical real estate market where neither buyers or sellers have a major advantage in dictating the direction of the market. Team Bober has been prepared for this market and we are still able to successfully hep our clients navigate the challenges of buying & selling real estate.
How has this Affected Buyers & Sellers?
Sellers are facing challenges they haven’t seen for several years. First of all, pricing is the #1 success factor in selling their home. This has always been true, but sellers have been able to dictate their terms when the market was moving at warp speed. A property’s condition has also become more of a determining factor as buyers have less available cash for repairs after closing. Negotiating the Home Inspection and repairs are now a big part of almost every transaction.
Buyers are enjoying the balancing of the Real Estate Market with more favorable terms when they purchase a home. We are seeing more buyer paid closing costs, home inspection repairs, and homes selling for below listing price. With less buyers in the market, most real estate transactions are being negotiated in fairness between a single buyer and seller as opposed to multiple offer scenarios. Competent and experienced Realtors representing their clients are using their skills to serve their clients.
what’s going to happen in the 2nd half of 2024?
The second half of 2024 is looking up. The Fed has already mentioning dropping rates this year and mortgage rates are inching lower. Many experts are predicting this year’s Spring Market is merely developing later than expected. Ther is a seasonality in the Real Estate Market with about 60% of sales happening in the Spring. We know there is a mass of consumers who need to move and they are just waiting for conditions to improve. We very well may hastill have our Spring Surge, just later in the year.
Team Bober is prepared to serve our clients in any and every market. The triggering events causing people to make their move are still happening and we know there are big things coming. If you are thinking of making your move and want to learn more about how you might fit into this market, give us a call!