Housing Market Predictions for 2024
After mortgage rates hit two-decade highs and housing inventory stagnates, many zealous sellers hope to make a bang.
At the same time, optimistic buyers are eager to get off the sidelines and into a home.
Many experts predict that 2024 will be a better year for the housing market, but they still believe many individuals will struggle to acquire the property of their dreams. If you plan to buy a house or flat this year, here's what you need to know to prepare yourself.
Housing Market Forecast for 2024
Essentially, all of 2023's problems remain. High mortgage rates, low housing stock, and extraordinarily out-of-reach prices are the perfect ingredients to create an unaffordability environment.
This trend has impacted homebuyers' momentum from the last months of 2023 and has minimised deal closings as spring comes, a proven busy period for property buying. Specialists anticipate a slower rise in real estate prices than in previous years, but fluctuations will depend considerably on the local market supply and vary from region to region.
But what does all this mean? Keep reading for more details.
Will Housing Inventory Increase?
The housing inventory is minimal in many developed countries, especially in major urban areas. In other words, there are simply not enough homes for sale.
For inventory levels to get better, one of two things must happen:
- Homeowners in mass must list their existing properties for sale;
- Construction companies must start building new homes in large numbers;
Unfortunately, both scenarios seem highly unlikely. However, specialists believe there will be a slight increase in the number of homes for sale. It's predicted that some homeowners will be willing to sell their properties at an all-time high price while developers and investors will build more new houses and residential blocks compared to 2023 and years prior.
The increase in housing inventory will differ depending on the country. For example, in the United States or the United Kingdom, a 5% growth is expected compared to a 4.1% increase in Spain.
Will Home Prices Drop?
It's a public secret that housing prices are on fire. They have steadily risen for years, and 2024 won't be an exception. However, unlike previous years, the price increase is anticipated to be less noticeable. In fact, in some parts of the world, housing prices will go through a slight drop.
For instance, real estate professionals in the United Kingdom forecast a 1.5% and 0.8% decrease in England and Wales. In comparison, Scotland and Northern Ireland are expected to go through a 4.8% and 1.4% rise respectively.
Price fluctuations are linked directly to the housing inventory. The supply must drastically improve for them to fall, which from the previous paragraph makes it clear that it wouldn't happen.
What's the Solution to the Pricing Crisis?
While it's doubtful that prices will significantly decrease in the years to come, it's also inevitable that as time passes, more homeowners will have to sell their properties because of life events. It will slightly boost the housing inventory in some parts of the world, ultimately lowering prices.
Experts believe tokenisation may stabilise the real estate market and impact prices positively. Tokenisation is a process where properties are digitised and divided into tokens, each representing an ownership share. Investors can acquire stakes in different types of real estate, hence helping them diversify their portfolios and get mortgages at more reasonable rates. It also means that almost anyone can become an owner of a revenue-generating property, allowing them to increase their income.
Will 2024 Be a Seller or Buyer's Market
In today's market, minimal inventory continues to give sellers an advantage. It's simple: there are more buyers than properties, so each house or flat that enters the market instantly becomes a hot commodity.
Without a major jump in the available inventory, it's dubious that buyers will take the upper hand from sellers. If the existing numbers are carefully analysed, it becomes evident that the issue with low inventory won't be remedied in the short term. That's why buyers should be careful not to bite more than they can financially afford because they won't be getting a bargain.
Will Housing Sales Decline?
Let's look at the American residential real estate market in 2023. Home sales declined for five months in a row before rising a bit in November and December before falling again at the very end of the year. Compared to 2022, this was a 6.2% drop.
2024, on the other hand, may pivot due to the continuous drop in mortgage rates. This trend may motivate some to ask for a loan at favourable terms to purchase a home. Some property owners may also decide to sell their houses or flats, adding much-needed inventory to the market, to use the funds with a loan to acquire larger, more expensive real estate that can be sold for a bigger profit.
When Will Be the Ideal Time To Buy a Home in 2024?
Buying a home isn't a tiny decision, regardless of the market conditions. For many, getting a house or flat will be the largest single purchase in their lifetime, meaning it can severely affect their financial health.
The real estate market is challenging to time. Seller and buyer behaviour changes depending on different factors, some of which cannot be predicted or controlled. That said, the best time to buy a home is when you find a property you can afford and like that meets your family's current and future needs.
