Let’s Talk Real Estate – March 2024
2023 IS NOW BEHIND US and what a year it was. Jackson County saw the lowest number of homes sold since 2014. Will 2024 be different? Will home sales continue to drop, or will 2024 be the beginning of the Real Estate Recovery?
Jackson County saw a total of 2,650 homes sold in 2023, down 26% from 3,601 in 2022. This is a big drop, but much better than the national average, which saw home sales fall to 1995 levels. When you consider the U.S. population has 66 million more people than in 1995, it makes the numbers even worse. The disappointing home sales came from a combination of high mortgage rates combined with high home prices which makes home buying prohibitively expensive for many. It was the year of the stalemate, with sellers reluctant to sell their homes and part with their 3% mortgages and with buyers who were waiting for more inventory, and lower prices. Neither happened. Despite home sales falling to a low not seen in nearly a decade, prices largely held steady in Jackson County with the medium home price falling less than 5% to $419,000. The lack of inventory for sale really helped keep home prices from declining.
What will happen in 2024, recover or crash? Home shopping activity has already started to pick up. Since January, home sales and home prices have increased while interest rates have decreased. In December, nationwide pending sales increased 8.3% and in January, the 30-year average mortgage was down to 6.6%.
There is so much pent-up demand in the market. Buyers who postponed purchases in the last couple of years due to high rates may not be able to keep waiting. Millions of millennials are in the first-time home-buying age range and waiting to buy. Homeowners who want to move but have feared paying a significantly higher mortgage rate on their next home will feel more comfortable selling as interest rates drop.
Mortgage rates are substantially lower compared to just two months ago—rates are predicted to continue to fall, and as a result more and more inventory is expected to appear on the market in the upcoming months.
The Federal Reserve announced in February it will leave interest rates unchanged, setting the stage for rate cuts to come and paving the way for relief. Jerome Powell, chairman of the Federal Reserve, indicated as many as three interest rate cuts coming this year, the exact pace and the depth is unknown, but it will be welcomed by home buyers and sellers alike.
In reaction, Freddie Mac forecasts that mortgage rates will be below 6% by the end of the year and the National Association of Realtors (NAR) anticipates mortgages rates to remain in the 6% range for most of the year. While 6% is higher than the all-time lows of 2020 and 2021, this is lower than the historical average of 7.74%. NAR is also forecasting a 13% increase in existing home sales compared to 2023. The rising trend is expected to continue into 2025 with another 15.8% increase. Some mortgage companies are trying to help stimulate home sales by offering a no cost refinance, so you can buy at today’s mortgage rate, but refinance for free as rates drop even further.
Recovery or Crash? We predict a robust recovery that is tied to decreasing rates, combined with the growing pent-up demand. 2024 will be different than 2023, and the beginning of the Real Estate recovery. The sun is not only coming out for the summer, but also for home sales!