Ready to hit the 2024 piñata and see what falls out?
First, a quick recap of the past few years to give some perspective on what you might see this year.
We reached historic lows in mortgage interest rates at the end of 2020 / beginning of 2021. These low rates are what created the massive surge in home buying. This wiped out the already low inventory of homes for sale and home prices started rising fast. As we economists (ok I can say that because it was my major and this is the one thing that I DO remember) like to say – A simple Supply and Demand issue. When the demand for something (homes) greatly outnumbers the supply people tend to go crazy and pay more and more… and more for it. Home prices in our area reached their peak in May 2022.
This amount of appreciation was unnatural and unsustainable. So yes, what goes up eventually comes down. By down, however, I mean an adjustment. We had an adjustment from the peak. That does not mean we had a crash, nor does it mean we will see prices continue to fall. IF we had enough homes on the market to meet the demand, the higher interest rates of 2023 would have brought down prices much further. The reality is that demand is still higher than supply and there will continue to not be enough homes for the buyer pool. That’s a subject for another post.
WHAT WILL INTEREST RATES DO IN 2024?
Rates topped out in October 2023 at 7.79%. Since then they have been decreasing and the Fed has indicated that they expect to make more cuts to the key interest rate this year. Mortgage rates will reduce further, albeit not very quickly. The predictions from the experts that I follow range from a low of 5.99% to 6.04% by the end of the year. Other predictions I have seen are FannieMae at 6.5% and National Association of Realtors at 6.3%.
WHAT WILL HOME PRICES DO IN 2024?
Remember the peak in our area was May of 2022. The adjustment already happened. We are now seeing a slow increase in prices and the word from the experts is that appreciation will be modest this year – Perhaps something like 4.6% for King County and 3% for both Snohomish and Pierce.
WHAT ELSE SHOULD I KNOW ABOUT 2024?
Did you know that 84.3% of homeowners in WA State have a mortgage interest rate below 5%? 67.7% have a rate below 4%. Why do you think we haven’t seen many home sales over the past year? Even if someone wants a different home – how hard is it to let go of that rate?
As we see the rates slowly decline this year we will see surges of listings come on the market as these sellers are finally feeling the pressure and decide the current rates are ‘good enough’ to warrant a move elsewhere. If we get to 6% or below the sellers will come out to play. Get ready buyers!
WHAT IF I WANT TO BUY IN 2024?
Get ready now. When the rates do down other buyers will be ready to buy.
Consider being ahead of these buyers. Why not start now? There is no pressure to buy but being prepared is key. There are also work-arounds if you want to buy now but are hesitant because the rates may come down – ask me about these. There is a lot to know, even if you have previously purchased property. For example, did you know as of January 1st real estate brokers now need a contract with buyers for buyer agency and as part of this contract the buyer is to pay their buyers agent. Buyers can no longer expect this payment to come from the seller’s side. Again, ask me about this.
WHAT IF I WANT TO SELL IN 2024?
Sooner the better might be key, if there is no reason you need to wait. The inventory of homes is so low right now that any home on the market is a hot item and many are receiving multiple offers. Regardless of interest rates, the buyers are out there. If the interest rates get close to 6% you will have more competition from other listings.
As always, make sure your home is ready, Start early. Things always take longer than we think.
It’s never too soon to contact your real estate broker. Much of the work done by the team is preparing and planning. Let’s get moving!