Spring has come and gone, and despite high hopes for a rebound, the housing market stays in a slump. Will the dog days of summer finally bring change?
As of now, buyers and sellers face most of the same challenges they did this time last yr: high rates of interest, inflated list prices and near-record-low inventory. Still, signs point to more favorable conditions for buyers and sellers within the latter half of 2024.
Here’s how real estate experts predict the following few months will unfold.
Rising costs and election yr uncertainty
One recent development on the radar of industry insiders is the ever-climbing cost of householders insurance. Home insurance expenses have already seen a double-digit increase over the past yr, and as hurricanes, wildfires and other natural disasters proceed to throttle large swaths of the U.S., they may likely keep rising.
One other recent development is a slew of lawsuits regarding real estate commission sharing.
The actions outlined in the biggest of those settlements, which involves the National Association of Realtors (NAR), the biggest trade association within the U.S., centers on how agents representing homebuyers receives a commission. Traditionally, sellers paid the commission for each the vendor’s agent and the customer’s agent (typically around 6% of the sale price, split between the 2 agents).
As per the ruling, starting in mid-August, agents representing home sellers will now not be allowed to supply compensation to agents representing buyers on listing databases, a change designed to remove any incentive for purchasing agents to steer people away from listings that don’t offer compensation.
Going forward, more buyers will likely need to negotiate that fee, or pay it outright.
Either way, since 2024 is an election yr, with little certainty of how the consequence will impact people’s funds, many home buyers and sellers are selecting to remain on the sidelines until 2025.
“Historically, election years can result in a more cautious approach within the [housing] market,” says Rainy Hake Austin, president of The Agency’s residential brokerage arm. “Buyers and sellers may adopt a wait-and-see attitude, delaying transactions until after the election.”
Prices are down, inventory is up
For a lot of would-be buyers, the fee of shopping for property is still too high. Fortunately, the tide appears to be turning.
Mortgage rates are finally declining, and will proceed to stabilize throughout the remaining of the yr.
Rates are still within the high 6% range, but every fraction-of-a-percent decrease makes the housing market cheaper for on a regular basis Americans. In accordance with Zillow’s research, a drop to simply 6.5% would increase the typical home shopper’s buying power by anywhere from $11,000 to $86,000, depending on where they live.
No matter how far rates fall, Danielle Hale, chief economist at Realtor.com, says we’ll likely see far less volatility in week-to-week rate changes going forward, giving buyers a much clearer picture of how you can budget for a house purchase.
On that front: Home prices are still going up, however the pace of growth is leveling off. In accordance with the brokerage Redfin, prices increased by 0.3% between April and May (essentially the most recent data available), the smallest gain since January 2023.
Inventory remains to be well below pre-pandemic levels, however the market is shifting on this respect, too.
Homeowners now not feel “locked in” by their low mortgage rates, and are finally beginning to list their properties. And since fewer would-be home buyers are making offers on those properties, more sellers are being forced to chop their asking prices — one other boon for previously priced-out buyers.
“The longer rates remain relatively high, the more we are going to see sellers acclimate to this latest normal, and we’ll see more inventory growth,” Hale says.
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