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THE 2024 HOUSING MARKET:

Wells Fargo was the first to warn that the “housing market is headed back to a 1980s-style recession." However, even though Wells Fargo believes that the housing market could enter a “Recession” - that doesn’t mean lower prices - in fact, to them, it means the opposite.

They say, because fewer sellers are listing their homes, “home prices will continue to appreciate at a slightly slower pace because of underlying demand and tight supply, rising 1.8% by the end of this year, as tracked by Case-Shiller, and 2.5% in 2024. In 2025, Wells Fargo forecasts home prices will rise 4.4%.”

On the other hand, Morgan Stanley believes that housing will start to get more affordable throughout 2024, saying: “We expect home sales to be weak in the first half of next year, but activity should pick up in the second half and further into 2025, and that's primarily because affordability will improve.”

They also expect that the Federal Reserve will start lowering interest rates in mid-2024, which - will prompt more sellers to list, and more buyers to obtain a slightly more affordable mortgage. They anticipate rates to be as low as 0.4% by late 2025 - meaning, according to them - we’ll be back near a 0% interest rate policy in just 2 more years.

The chief economist of Realtor.com also agrees with the fact that affordability will only improve from here, noting that ‘Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors all predict that the 30-year mortgage rate will fall to below 7% in the second half of 2024.’

However, the downside is that - regardless of who you ask - nearly everyone unanimously believes that housing prices are unlikely to see much of a decline in the near future, at least until home sellers outnumber home buyers - which, right now - isn’t anywhere close to happening.

According to the CEO of Redfin, the ”only good thing right now about the US housing market is that it can't get much worse from here” in terms of low inventory, high mortgage rates, and low sales - but only time will tell if these aspects improve.

At this point, it’s said that - in order for affordability to fall back to “normal” levels - one of three things needs to happen: “Either the 30-year mortgage rate needs to fall by 4.4 percentage points, the median household income needs to rise by 62%, or home prices need to fall by 38%.”

Although, keep in mind that t’s reported, of the homes sold in October, “28% went above the listing price, which suggests there was still a bidding war among would-be buyers.”

Personally, I tend to think that most of these real estate predictions are totally random guesses (and, inevitably, a few of them will be right) but, if you were to ask me to give a guess, I’d say rates hang higher than people expect for the next year, I’m guessing they’re not going to go down as much as people think and over the next few years, the housing market will slowly begin to normalize, but - it could take a long time.

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