Homebuyers may find some relief in 2024 as the housing market experiences shifts in mortgage rates and listing availability, according to forecasts from real estate brokerages Redfin and Zillow. Both companies share insights into the factors influencing the real estate landscape in the coming year, emphasizing potential changes in affordability, home prices, and buyer behaviors.
Redfin’s Forecasts for 2024
1. 1% Decline in Home Prices:
Redfin predicts a 1% year-over-year decline in home prices during the second and third quarters of 2024. This potential dip in prices, though modest, could provide some respite for homebuyers grappling with affordability challenges.
“Home prices will still be out of reach for many Americans, but any break in the affordability crisis is a welcome development nonetheless,” Redfin wrote.
2. Increase in New Listings:
Redfin anticipates a rise in new listings as homeowners, recognizing the current high mortgage rates, show increased interest in selling before potential price declines. This surge in new listings could contribute to a more balanced housing market.
3. 5% Growth in Home Sales:
The brokerage expects a 5% year-over-year increase in home sales, with momentum building throughout the year. This positive trend contrasts with 2023, where sales lost momentum. The projection suggests a more active and dynamic housing market.
4. Gradual Decline in Mortgage Rates:
Mortgage rates, a key influencer in the housing market, are predicted to steadily decline in 2024. While starting the year at 7%, Redfin forecasts a fall to approximately 6.6% after the first quarter. This easing of mortgage rates could offer relief to potential homebuyers.
5. Changes in the Real Estate Industry:
Redfin anticipates shifts in the real estate industry, with more homebuyers directly working with listing agents and increased negotiation of commissions with listing agents. The transparency in commission information is expected to empower buyers in negotiating costs.
6. Rise of Renting’s Appeal:
Renting is poised to lose its stigma, becoming an attractive option for many millennials and Gen Zers. Affordability challenges in homeownership, coupled with increased demand for larger rental units, may shift the perception of renting as a viable and even preferable lifestyle.
7. Housing Challenge for Biden’s Reelection:
Redfin notes that the housing market poses a challenge for President Joe Biden’s reelection bid. Despite a strong overall economy, the increase in home prices during Biden’s term may impact voters’ perceptions, particularly among younger demographics.
Zillow’s Perspectives on 2024
Zillow’s predictions align with some of Redfin’s forecasts, emphasizing:
1. More Options and Affordability:
Zillow foresees increased options and improved affordability for homebuyers in 2024. This positive outlook comes after the 20-year-high mortgage rates experienced in 2023.
2. Single-Family Rentals as Starter Homes:
Zillow predicts a shift where single-family rentals become the new starter homes. The demand for larger rental units is expected to grow, accommodating families renting for more extended periods.
The Affordability Challenge and Policy Proposals
Both Redfin and Zillow highlight the persistent challenge of housing affordability, especially for younger generations. Redfin emphasizes the need for President Biden to address affordability in his reelection bid, suggesting potential policy proposals such as subsidizing down payments and funding housing vouchers.
As the real estate landscape evolves in 2024, homebuyers, sellers, and policymakers will need to navigate changing dynamics. Whether it’s a slight decline in home prices, a rise in rental popularity, or policy proposals to address affordability, the coming year promises shifts that could impact the housing market across the United States.
“Democrats are likely to focus on subsidizing down payments for first-time homebuyers, promoting inclusionary zoning and funding housing vouchers, which are all popular with liberal voters,” Redfin wrote. “Republicans are more likely to focus on reducing regulations that limit development.”