United States Housing Market, Is it a Good Time to Buy Real Estate?

In the United States, the median sales price for an existing home was calculated to be at $393,500 as of March 2024. This is the highest median price for the month of March on record according to the National Association of Realtors. The limited housing inventory can reason for this average price increase. Along with this increase, rates are at a record breaking high. The normal person would assume it is a terrible time to then, correct? Maybe not.

To make an educated decision on this we must consider:

1)        Will housing sales decline?

2)        Will housing inventory increase?

3)        Will mortgage rates lower?

4)        Will home prices go down?

Will Housing Sales Decline?

In 2023, home prices held a firm price or even continued to rise and that has continued to year 2024. Yet as of March, home sales were down both month-over-month and year-over year. As mortgage rates continue to dip, this trend may change. Even though the housing demand has been on a rise due to job and population growth, mortgage rates have been more of the dictating factor to home buyers.

Will Housing Inventory increase?

As of today, housing inventory supply remains very low. Part of the reason this is, back a few years ago everyone refinanced their mortgage to a 2% or 3% rate. None of these homeowners will not want to sell their home and adopt a much higher rate when purchasing a new one. This has created a market of homeowners that sit on their properties, not wanting to sell. For the inventory levels to improve, their will either need to be a surge in new-construction homes hitting the market or homeowners list their properties.

Will Mortgage Rates Lower?

As of May 1st, 2024, the Federal Open Market Committee announced that officials voted to leave the benchmark federal funds rate unchanged. The federal funds rate is the borrowing rate for credit unions and commercial banks, which indirectly influences mortgage rates. The only way we will see mortgage rates to drop is if the Fed sees evidence that inflation is slowing down. This could set us up to see an adjustment hopefully in late summer or early fall.

Will Home Prices go Down?

Housing prices within California have been on fire lately, considering us to be in a seller’s market for real estate. Median home prices in March are only about $20k short of the highest ever recorded month, being in June of 2022 set at $413,800 recorded by NAR. With the lingering housing shortage and increased rates, home prices are probably going to continue to rise. They are seen to rise in line with consumer price inflation and wage growth over the next few years. The National Association of Realtors predicts as well throughout the course of 2024 that home prices will increase.

In Conclusion:

From what we can see, home prices in California are foreseen to only increase. Not until the mortgage rates drop will people be willing to sell their homes (creating a bit of a market inventory increase). A lot of people who are on the sidelines right now, with the mindset of waiting for this dip, will then come out to buy. But will the mass number of new buyers compensate for the fewer homes now on the market? Bidding wars will break loose and home prices will most likely go above asking price with the larger number of eyes on each property now. People say if you can find a decently priced property, buy now. The 1-2% increased rate you can always change and refinance, but your purchase price you cannot.  

If you are looking to get prequalified on your new home today or have any mortgage related questions, fill out our form on www.danielzand-loans.com to setup a free 15-minute appointment today.

Caginalp, R. (2024, May 13). Housing market predictions for 2024. Bankrate. https://www.bankrate.com/real-estate/housing-market-2024/#will-inventory-increase