Experts Predict More Stability In The Housing Market In 2024
Zillow’s Predictions for Housing Market Trends in 2024
The real estate market has been a hot topic throughout 2023, with soaring mortgage rates and sky-high home prices dominating the headlines. As we look ahead to 2024, Zillow's housing forecast offers insights into what to expect. While challenges remain, there are glimmers of hope for both buyers and sellers. Here’s what the analysts at Zillow believe we’ll see next year:
1. Home Prices Will Remain High
Zillow predicts that the cost of buying a home will continue to be a challenge for prospective buyers. The market will remain competitive, with high prices setting the tone. Skylar Olsen, Zillow's chief economist, notes that while the market may present challenges, it will start to show signs of improvement. Many buyers will turn their attention to homes that need some work, embarking on do-it-yourself upgrades and repairs to make homeownership more affordable.
2. More Homes Will Hit the Market
Zillow's forecast suggests that "higher for longer" will be the mantra for mortgage rates in 2024. As homeowners realize that high mortgage rates are here to stay, more of them will decide to list their homes for sale. This wave of listings is expected to provide relief to the tight housing inventory, ultimately benefiting buyers by spreading demand and slowing price growth.
3. Home-Buying Costs Will Stabilize
Affordability has been a significant concern for homebuyers, with many spending over 40% of their earnings on mortgage payments. Zillow anticipates that home values will hold steady in 2024, providing some respite for buyers. Although predicting mortgage rate movements is challenging, the expectation is that they will remain fairly stable in the coming months. This stabilization in buying costs will allow wages and savings to catch up, offering relief from the rapid rise in housing expenses in recent years.
4. Rise In Single-Family Rentals
While there may be some improvement in home-buying affordability, many households will still find homeownership financially challenging. Zillow predicts a growing demand for single-family rentals, particularly among families seeking more affordable options with amenities like private backyards. Homeowners may opt to turn their properties into investment rentals instead of selling, thanks to the ultra-low mortgage rates they currently enjoy.
5. Rental Demand Shifts Towards Downtown Areas
Urban-suburban dynamics have been evolving, with suburban rent prices outpacing urban rents in many markets. Zillow foresees a surge in rental demand near downtown centers, following the trend observed in New York City. Multifamily construction in these areas will offer renters more choices, potentially leading to increased competition among landlords and more rental concessions.
6. Homes Needing TLC Will Attract Buyers
Buyers will increasingly turn their attention to homes that require a little TLC before becoming their dream homes. Limited inventory, while expected to improve, will still be lower than pre-pandemic levels. In the face of limited choices, buyers will overlook minor flaws in homes, such as outdated bathrooms or kitchens. The higher cost of purchasing a home today makes house flipping less attractive, potentially reducing competition from flippers.
As we enter 2024, the housing market continues to navigate a challenging landscape. While affordability remains a concern, Zillow's forecast provides a ray of hope for both buyers and sellers. The market may offer more options and stability, making homeownership a bit more attainable. However, competition in the rental market, evolving rental demand patterns, and a focus on homes needing renovations are key trends to watch in the coming year.