Following a year in which housing inventory was low, forecasts for 2024 show a market that’s about to loosen up.
The biggest driver will be more predicted cuts in the interest rate. Following the interest rate dropped below 7 percent in December, economists say even lower rates are coming. If all goes well, we should see 6 percent to six-and-a-half percent for 30-year fixed mortgages in the spring.
We’re seeing indications of more inventory in homes available for sale starting early in 2024. After a “hurry up and wait” mentality in the 2023 market, I’m seeing and hearing that the log jam is about to loosen up. I’ve met with significantly more sellers in December getting ready to put their homes on the market in early 2024 than I did at the end of 2022. From those conversations, it’s clear that a new mentality has emerged. Sellers (and buyers) are more accepting of the higher interest rates than they were. It’s the reality now and people are ready to deal with it.
PREPARE FOR WHAT’S COMING
Though we’re expecting to see an increase in inventory, we’re not expecting much change in prices. Locally they’ll remain steady, which means they’re already high. That doesn’t mean sellers are in the driver’s seat, however. If you’re going to market in 2024, expect more competition. You’ll have to be smart with your pricing, don’t try to gouge buyers. Get your house in order, literally. Repaint, eliminate the clutter, make the repairs you’ve been putting off, get your yard and gardens trimmed and cleaned up. An investment of thousands to get your house and grounds in turn-key condition will pay off in the tens of thousands you’ll make on the sale price.
Find a broker with a strategic marketing plan that can put your home in the best light. With the increased competition, buyers will base their decisions on what house to visit on the quality of online presentation, for example. I have a network of high-end service providers like photographers, stagers, and contractors that ensure my clients’ homes are showcased. The difference between what a pro can accomplish photographically versus what an agent or homeowner can do with their phones is vast. Brokers trying to cut corners lose qualified buyers for their sellers.
Buyers have to have a plan, as well. Though inventory is expected to rise, so will your competition. There’s pent-up demand that’s been held back by the lack of opportunities. With more inventory, those buyers are going to get off the bench and get active. Be prepared to move fast and deliberately. Be detailed about your needs and wants to give your broker a solid idea of what you’re looking for. It will help them narrow the possibilities quickly, so you can efficiently see the right places in person. I know these neighborhoods so well I can tell my buyers which homes they need to see quickly, and how fast we’ll have to move to win.
Get your finances sorted and solid. Have your lender lined up, get some of your assets liquid so you have cash on hand.
OPTIONS & OPPORTUNITIES
The higher interest rates have kept some homeowners from selling because they don’t want to give up their low rates, despite wanting a larger home, more bedrooms, a better commute, or different schools for their kids.
The rates have also had a profound impact on the traditional starter home market. Most people can no longer afford them. They simply cost too much for many potential buyers to buy on only their salaries.
Renting has become the new starter home. We’re seeing those younger potential buyers renting while saving to get enough for the traditional 20 percent down payments.
This creates an opportunity for homeowners who have low-interest mortgages on their present home who want to move. If you’ve got a rate below three percent, you can likely rent the home and more than cover the mortgage. The sting of a higher interest rate is lessened by knowing your initial investment is paying for itself. And when interest rates inevitably go even lower, you’re in a great position to refinance the home you’re living in, building your wealth.
It’s a transitional and often confusing time in the housing market. If you have any questions about buying, selling, renting, or just about the investment in your home, I’d love to set up a time to talk it through. Madison Park is my neighborhood — my home, office, and team are right here. My team is one of the top real estate teams in the state. We succeed based on our experience in changing market conditions and our data-driven approach. We’re willing and able to do the hard work for our clients and make the most of their investment.
Wishing you all a happy new year!
Chris Sudore Madison Park Resident and Managing Broker Coldwell Banker Bain | Global Luxury. Reach him at Chris@KingCountyEstates.com or at KingCountyEstates.com