2024 Real Estate Market Predictions: What to Expect as the Year Comes to a Close
By Chrystal & David Schoenbrun - Pacific Home Group 2024 Real Estate Market Predictions: What to Expect as the Year Comes to a Close Chrystal and David Schoenbrun Broker Associate/Realtor Team @ Pacific Home Group | Y Realty "Navigating Real Estate, Nurturing Dreams" DRE#1409474 & 1761327 September 12, 2024 The real estate market in 2024 has been anything but predictable. From soaring mortgage rates to tight inventory, it's been a rollercoaster ride for buyers and sellers alike. But as we approach the end of the year, things are starting to shift. Whether you're planning to buy your first home, looking to sell, or simply keeping an eye on the market, understanding these upcoming trends can help you make informed decisions. Here's a detailed look at what experts are predicting for the real estate market for the remainder of 2024 and beyond. 🏡📉 1. Interest Rates Set to Decline 📉 One of the most significant predictions for late 2024 is a decline in mortgage interest rates. After reaching unprecedented highs of 8% earlier in the year, mortgage rates are finally expected to ease. While we won't return to the record lows of 3-4% seen during the height of the pandemic, most experts, including those from the Mortgage Bankers Association and Fannie Mae, expect 30-year mortgage rates to fall to around 6% by the end of the year(Stessa)(NerdWallet: Finance smarter). What Does This Mean for Buyers? Lower interest rates will give buyers more purchasing power, as lower monthly payments make homes more affordable. This decline could also reignite buyer demand, particularly in areas where high rates had previously priced out potential buyers. However, the decline won't be smooth. According to Daryl Fairweather, Redfin's chief economist, we may see large fluctuations as rates drop, meaning potential buyers will need to time their decisions carefully(NerdWallet: Finance smarter). 2. Home Prices Will Stabilize, Not Drop 🏠If you’ve been waiting for home prices to plummet, you might have to keep waiting. Despite the cooling market, experts suggest that home prices are unlikely to see significant declines. Instead, we can expect stabilization. Why Aren’t Prices Dropping? There’s a delicate balance between low supply and low demand. Many homeowners are reluctant to sell due to their locked-in low mortgage rates, resulting in fewer homes on the market. Meanwhile, high mortgage rates have kept some buyers on the sidelines, leading to an equilibrium where prices remain steady. Even if rates fall, the shortage of homes for sale is expected to prevent any major price drops (NerdWallet: Finance smarter). While some markets—particularly those that experienced rapid price growth during the pandemic—may see small corrections (1-2%), the overall forecast is for price stabilization through the remainder of 2024. 3. Inventory Will Stay Tight 🔍 The story of limited inventory is one that has plagued the housing market throughout 2023, and unfortunately, that trend is expected to continue through the end of 2024. The supply of available homes for sale remains historically low, driven by a combination of factors. What’s Driving the Inventory Shortage? One key reason is that many homeowners locked in low mortgage rates before the rate increases of 2023. For those homeowners, selling their homes and buying a new one at today’s higher rates simply doesn’t make financial sense. As a result, they’re staying put, limiting the number of homes hitting the market. Builders have also been slow to meet demand. While new construction has increased in some areas, supply chain disruptions and labor shortages have slowed down the building process (NerdWallet: Finance smarter). Where Might Inventory Improve? There is some hope on the horizon for homebuyers. As mortgage rates decline, more sellers may be willing to list their homes, opening up more options for buyers. New construction, particularly in suburban and more affordable areas, may also provide some relief to inventory shortages (NerdWallet: Finance smarter)(Realtor). 4. More Buyers Turning to Affordable Markets 🔥 As remote work continues to allow flexibility in living arrangements, we’re seeing an increased migration to more affordable housing markets. Cities that offer a lower cost of living and strong amenities, particularly in the South and Midwest, are becoming hotbeds of real estate activity. Why Are Buyers Moving? With the rise of remote work, many buyers no longer need to live near large urban centers. Instead, they’re prioritizing lifestyle and affordability. Markets like Grand Rapids, MI, and cities in Texas are seeing increased demand as buyers seek more space, better value for money, and a slower pace of life (Redfin). This trend is likely to continue into 2025, as affordability concerns persist in larger coastal cities. 5. New Construction and Multifamily Housing Gaining Ground 🏗️ While single-family homes remain highly sought after, multifamily housing developments are gaining traction, especially in urban and suburban areas. With high home prices and interest rates still a concern, some buyers and investors are turning to multifamily properties as a solution for housing needs. Why Multifamily Housing? Multifamily homes, including duplexes, triplexes, and apartment buildings, are becoming more attractive as they offer rental income opportunities for owners and provide a way to offset high housing costs. Investors are also capitalizing on the growing demand for rental properties as homeownership remains out of reach for some buyers(Realtor). At the same time, new construction—particularly in suburban areas—is seeing growth as developers respond to the demand for more affordable housing options. The housing market may be evolving, but opportunities still abound for savvy buyers and sellers. With interest rates expected to decline and markets shifting, now could be the perfect time to make your move. Contact Pacific Home Group today to explore your options and navigate this changing landscape with confidence. Let’s find your dream home or maximize your investment! 🏡💼 #RealEstate2024 #InterestRates #MarketTrends #HomeBuyingTips #PacificHomeGroup #HousingMarket #RealEstateInvesting #HousingForecast
How Accessory Dwelling Units (ADUs) Are Changing the Housing Market
By Chrystal & David Schoenbrun - Pacific Home Group How Accessory Dwelling Units (ADUs) Are Changing the Housing Market 🛠️ Chrystal and David Schoenbrun Broker Associate/Realtor Team @ Pacific Home Group | Y Realty "Navigating Real Estate, Nurturing Dreams" DRE#1409474 & 1761327 September 19, 2024 As housing prices soar and inventory tightens, homeowners are finding innovative ways to maximize their properties, and Accessory Dwelling Units (ADUs) are leading the charge. Whether it’s to generate passive income, provide affordable housing, or accommodate multi-generational living, ADUs are transforming the real estate landscape in 2024. 🏡 What Exactly Is an ADU? An ADU, or Accessory Dwelling Unit, is a secondary, fully self-contained living space located on the same property as a primary residence. These units can either be attached to the main home, such as a basement or garage conversion, or built as a detached structure, like a small backyard cottage. ADUs must contain essential amenities—such as a kitchen, bathroom, and living area—allowing for independent living(World Economic Forum)(Breaking AC). ADUs go by many names, including "granny flats," "in-law suites," and "backyard cottages." These structures have gained traction in recent years as they provide versatile housing solutions for families, renters, and even the owners themselves. Why ADUs Are on the Rise The rising popularity of ADUs is fueled by a variety of factors, especially in regions like California where housing shortages are a pressing concern. In response to the growing demand for affordable housing, cities and states have revised zoning laws, making it easier for homeowners to add ADUs to their properties. For instance, California passed legislation in 2020 that allows homeowners to bypass some of the previous restrictions related to ADU construction, accelerating their adoption(ArchDaily). Beyond the legal ease, there are practical reasons why ADUs are booming: Affordable Housing Solution: As housing costs increase, ADUs offer a way for homeowners to provide affordable rental units, helping alleviate the housing shortage in high-demand markets like Los Angeles and San Francisco. Maximizing Property Value: By adding an ADU, homeowners can increase the overall value of their property. Rental income from an ADU can also help offset mortgage payments or even serve as a primary source of income. Flexible Living Arrangements: ADUs provide multi-generational living solutions, offering separate yet close-by housing for elderly family members, young adults, or caregivers. They also allow for flexible arrangements, such as using the ADU for rental income now but later as a family space. Legal and Financial Considerations Building an ADU used to be a cumbersome process due to strict zoning laws and permitting hurdles. But recent changes have made ADUs much more accessible for homeowners. In places like California, cities are now offering pre-approved ADU designs, and the state has streamlined the permitting process to reduce costs and construction timelines(ArchDaily). Financing an ADU is also becoming easier, thanks to products like Fannie Mae’s HomeStyle® Renovation loan, which allows homeowners to finance an ADU as part of a renovation project. Homeowners can also use Construction-to-Permanent financing to cover the costs of building a new home that includes an ADU(Fannie Mae). Furthermore, ADUs often offer a high return on investment, both in terms of property value and potential rental income. The Benefits of Adding an ADU to Your Property Rental Income Potential ADUs provide homeowners with an opportunity to generate rental income. Long-term rentals, in particular, are in high demand in areas with housing shortages, making ADUs a profitable venture for many property owners. In cities like Los Angeles, where rent prices continue to soar, an ADU can bring in thousands of dollars each month, helping offset mortgage payments and boosting overall property value. Addressing Housing Shortages ADUs are increasingly seen as a solution to housing crises, particularly in urban areas. By allowing more people to live on a single property without drastically changing the neighborhood’s character, ADUs contribute to increasing housing density without the need for large-scale developments. Multi-Generational Living One of the most compelling reasons for building an ADU is the flexibility it offers families. ADUs provide a space for aging parents to live close to family while maintaining their independence. Alternatively, ADUs can offer young adults an affordable place to live, particularly in expensive urban areas, or serve as housing for a live-in caregiver. Increased Property Value Adding an ADU can significantly increase the resale value of your property. With housing prices in California continuing to climb, having an additional living space makes your property more appealing to potential buyers who see it as both an investment and a way to generate rental income. Challenges and Considerations for Building an ADU While the benefits of ADUs are clear, there are some challenges and considerations homeowners need to be aware of: Initial Cost: ADU construction can range from $150,000 to $300,000 depending on the size, materials, and location. Zoning and Regulations: While zoning laws have become more flexible, homeowners must still comply with local regulations regarding size, setbacks, and parking requirements. It’s essential to check with local authorities to ensure your ADU complies with these rules. The Future of ADUs in the Housing Market As the housing market continues to evolve, ADUs are poised to play a critical role in addressing both affordability and housing shortages. With more cities recognizing the value of these flexible living spaces, the barriers to building ADUs will likely continue to diminish, making them an even more attractive option for homeowners. Interested in adding value to your property or generating rental income with an ADU? Contact Pacific Home Group today to learn how we can help you navigate the process of building an ADU and make the most of this exciting real estate trend. 🏠✨ #RealEstate2024 #ADU #AccessoryDwellingUnits #PropertyInvestment #CaliforniaHousing #HomeRenovation #HousingCrisis #PacificHomeGroup
Real Estate Market Predictions for Late 2024: Interest Rates Are Finally Dropping
David & Chrystal Schoenbrun - Pacific Home Group Real Estate Market Predictions for Late 2024: Interest Rates Are Finally Dropping 📉🏡 Chrystal and David Schoenbrun Broker Associate/Realtor Team @ Pacific Home Group | Y Realty "Navigating Real Estate, Nurturing Dreams" DRE#1409474 & 1761327 October 3, 2024 After a challenging few years in the real estate market, there’s finally some positive news for homebuyers and sellers alike—mortgage interest rates have started to drop for the first time in over a year! With rates previously peaking at over 7% in 2023 and the beginning of 2024, the latest decrease to around 6.08% is a significant turning point (NerdWallet: Finance smarter)(Norada Real Estate Investments). But what do these changes mean for the real estate market, and how should buyers and sellers adapt to this shifting landscape? The Decline in Mortgage Rates: A Welcome Relief For much of 2023 and the early part of 2024, rising inflation and aggressive interest rate hikes by the Federal Reserve pushed mortgage rates to their highest levels in over two decades. These high rates made it difficult for many potential homebuyers to afford monthly payments, while sellers saw a slowdown in demand as fewer buyers could qualify for loans. However, as inflation begins to stabilize and the Federal Reserve signals a more tempered approach to interest rate hikes, mortgage rates have finally begun to drop. In September 2024, mortgage rates fell below 6.1% for the first time in over a year, a notable change that has renewed optimism in the real estate market (Norada Real Estate Investments). While we may never see the ultra-low rates of 2020 and 2021 again, this decline marks a pivotal shift for both buyers and sellers, creating opportunities for those who have been waiting for a more favorable market. What Does This Mean for Buyers? Lower mortgage rates mean lower monthly payments, which can significantly impact a buyer's purchasing power. For example, a rate decrease from 7% to 6% on a 30-year fixed mortgage could save buyers hundreds of dollars each month. This affordability boost allows homebuyers to consider more expensive properties or reduce their overall financial burden (NerdWallet:Finance smarter)(Norada Real Estate Investments). If you've been on the fence about purchasing a home due to high borrowing costs, now might be the time to take action. However, as rates decrease, more buyers will likely enter the market, increasing competition. Acting quickly could help you secure a property before demand pushes home prices higher again. What Does This Mean for Sellers? For sellers, the decrease in rates is expected to revitalize buyer interest, especially in markets where higher rates previously slowed down activity. With more buyers entering the market, sellers are likely to see an uptick in demand for their homes, which could stabilize or even boost prices in certain areas. Moreover, many homeowners who have been holding off on selling due to fears of lower demand may find this is an opportune time to list their property. As buyers return, homes that are priced competitively will likely attract more offers and move quickly (Norada Real Estate Investments). Inventory Challenges and the Supply-Demand Balance Even though mortgage rates are declining, inventory remains tight in many parts of the country. The housing supply has been constrained over the last few years, largely due to homeowners choosing not to sell, new construction delays, and supply chain issues in the construction industry. With interest rates now falling, the market is expected to see an increase in both listings and buyer activity, but it may take time for inventory levels to catch up with demand. This supply-demand imbalance could put upward pressure on home prices in certain regions, even as mortgage rates decrease (NerdWallet: Finance smarter). In cities like Los Angeles and San Francisco, where housing demand remains strong and inventory is low, buyers may still face stiff competition for available homes. As a result, both buyers and sellers should closely monitor local market conditions to make informed decisions. Long-Term Forecast for Mortgage Rates and the Housing Market Although rates have started to fall, experts caution that we are unlikely to see a return to the record lows of 2020 and 2021. The Federal Reserve is expected to take a gradual approach to rate cuts, meaning that while mortgage rates may continue to trend downward, they are likely to stabilize around 6% by the end of 2024 (USC Today). The broader economic outlook will also play a role in determining how much further rates will drop. Factors like inflation, job growth, and global economic conditions will continue to influence the Fed's decisions on interest rates. However, the overall consensus is that rates will remain manageable, providing some relief to homebuyers and sellers alike. If you're thinking about buying or selling a home, now is the time to act. With interest rates on the decline and buyer demand expected to increase, you could find the perfect opportunity to make your move. Contact Pacific Home Group today for expert advice and personalized guidance to navigate the changing real estate landscape. 🏡✨
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