Trends and Opportunities in the US Housing Market 2024.
Housing market trends and fluctuations are key indicators of the economy’s overall health, serving as a focal point in economic discussions. For homebuyers, sellers, and investors, it’s important to analyse current market conditions and predict what lies ahead in 2024.
- Challenges to supply despite continued demand:
A persistent demand for homes has been a defining characteristic of the US housing market in recent years. This trend has been facilitated by low interest rates, a growing population, and a strong job market. Despite this, supply has been struggling to keep up. Price increases are being driven up by a lack of available homes.
There will likely be a continued demand for remote workers in 2024, driven by demographic trends, economic growth, and remote work trends. With millennials becoming increasingly interested in homeownership, the demand for housing will increase.
- Rates are rising:
The housing market has benefitted from low interest rates in recent years, but there is growing consensus that rates will rise in the future. Inflation concerns or other economic factors may trigger the Federal Reserve to adjust interest rates. Slowing down home price appreciation could be caused by a gradual increase in interest rates.
The trend toward favorable mortgage rates should be kept in mind by homebuyers and investors.
- Variations according to region:
There are numerous regional housing markets with distinct characteristics within the US housing market. Despite robust growth in some areas, challenges may be faced in others. Regional housing markets are shaped by a variety of factors, including job growth and migration patterns.
Certain urban centers may face challenges as remote work becomes more normalized, while metropolitan areas that have seen substantial population growth due to remote work may continue to enjoy high demand.
- The relationship between technology and real estate:
Real estate is continuing to undergo changes due to technological advancements. A number of digital tools have become integral parts of the home buying and selling process, including virtual tours, digital transactions, and AI-driven analytics. With the continuing evolution of technology, the housing market is likely to be influenced even more by it in the future.
Real estate professionals and investors should stay on top of technological advancements, as they will enable them to make better-informed decisions and understand market dynamics.
- Policy statements from the government:
The real estate market can be significantly affected by government policies, particularly those relating to housing and finance. Market trends may be affected by regulations, tax policies, or initiatives to address housing affordability. Those involved in the real estate industry should closely monitor both federal and state legislative developments.
Experts predict that the housing market will undergo a few changes in the next five years. According to Zillow, the average home value in the United States is $355,852. In this calculation, we use seasonally adjusted data only for the middle tier of home prices. There was an average home value of $300,000 in July 2021. Over the past year, home values in the United States have risen 18.2% and are expected to rise slowly in the future.
According to the Census Bureau, the country’s median home value fell 0.1% from June to July, the first monthly decline since 2012. Following April’s 1.9% peak, monthly growth has slowed to 0.1% from July’s 0.1% drop. They now factor in price cuts received by for-sale listings as part of their forecast. As a result of changing market conditions, the share of sellers has increased. Home value estimates are also lowered by weaker home sales forecasts.
It is common for a weak consumer mood to lead to slow house sales. Slowing economic growth may also result in fewer house purchases if interest rates rise rapidly. Forecasts take into account mixed economic data. A record number of jobs were created in July, and unemployment rates were lower than expected.
As sellers cut their prices and competition decreases, bidding wars are fading. It is unlikely that those who have been priced out will see any improvement in the near future. As inventory levels stabilize much lower than before the pandemic, price declines should bring demand back into the market.
Low inventory and pent-up demand will drive the market for the foreseeable future.
Forecast for the housing market in 2024 and 2025
According to Zillow’s home price expectations survey, the housing market will likely return to pre-pandemic levels by 2024 in terms of inventory and first-time buyer purchases. As a result of a shrinking supply of homes, home values have grown by 32 percent in the last two years. The diminishing supply of properties has played a major role.
The majority of panel members expect housing inventory to reach pre-pandemic levels by 2024.
A decline in first-time buyer activity will continue until 2024, according to experts.
There is a majority of respondents who predict prices will rise by 46.5% between now and 2026, while the most conservative group predicts only a 10.3% increase.
Average responses indicate that by the end of 2026, there will be a total increase of 26.8%, or 4.9 percent compound annual growth rate.
Price and rent increases caused by the pandemic made saving for down payments difficult. Zillow found that first-time homebuyers fell to 37 percent in 2021, from 45 percent in 2019. With 26 percent predicting 2024 and 25 percent predicting 2025, first-time buyers will regain their pre-pandemic market share in the next two years.
It is predicted that first-time buyers will not reach 45% until after 2030, the largest generation in American history. Buyers in the U.S. are on average 43 years old, with the median age (43 years old) higher than the average age (45 years old). One out of five homebuyers (17%) is in their twenties or younger, and one in four (23%) is a senior citizen. This means that U.S. buyers represent a middle ground in terms of their age distribution.
In general, tenured homeowners (those who haven’t moved in a year) tend to be younger, whereas renters tend to be older. In general, buyer households earn more than the general population in the United States. Median household income among buyers is approximately $86,000, compared to $65,700 for the overall national median (2019).
According to survey respondents, prices are expected to rise 46.1% through 2026, while they are expected to rise 9.3% until then. There is an expectation of a 26.4 percent increase by 2026.
What will be the most significant increase in home prices in 2024?
The housing market experienced 19.7 percent price growth over the past year, but Moody’s Analytics projects a zero percent growth in home prices in 2023. For Fortune magazine’s latest housing analysis, Moody’s Analytics contacted the company. There will be significant differences in price changes between regions of the country, according to analysts.
According to financial intelligence firm, 414 regional housing markets will see home prices shift between the fourth quarters of 2022 and 2024. Home prices will decline in 210 of America’s 414 largest housing markets over the next two years, while they will increase in 204.
The biggest increases in home prices are expected in these cities in 2024:
Albany, Georgia (5.5 percent).
Casper, Wyoming (4.52 percent).
Columbus, Georgia (4.09 percent)
Rocky Mount, North Carolina (3.97 percent).
San Jose, California (3.83 percent).
In summary:
There will be continued activity in the US housing market in 2024, driven by a combination of demand, interest rate movements, regional dynamics, technological advancements, and government policies. In order to navigate the complex real estate market in the coming year, individuals and businesses must have a thorough understanding of these factors, coupled with a strategic approach. In an ever-changing real estate landscape, stakeholders can take advantage of opportunities by staying informed and adapting to changing conditions.