The Media Depiction vs. Reality
Headlines are written to intrigue readers with powerful statements that dramatize reality. Throughout 2023 the media focused on interest rate hikes, unprecedented home prices, and low inventory–often coming to the disheartening conclusion that homeownership is out of reach for many Americans. While the statements about rates, prices, and inventory are fundamentally true, we found reassurance in the context of historical market fluctuations. These are all obstacles that have been faced and overcome before.
As we move into 2024, we can see the light at the end of the tunnel.
The media will not have nearly as much fodder for dramatic headlines in 2024. We’re happy to report that our reputable sources are pointing to a more balanced and consistent market for the year ahead. Here are some of the key factors for this assertion:
What Will Happen with Mortgage Rates?
The Federal Reserve was laser-focused on dealing with inflation throughout 2023, thus making consistent increases in rates. As you probably heard, rates reached a 23 year high in mid-October. The surge in mortgage rates led to fewer real estate transactions nationwide. As of August, 2023 (the most recent month with available data) home sales in Salt Lake County were down 26.1% year-over-year.
We’re hopeful that 2024 will bring stabilization to interest rates, with 6% being the norm by the end of the year. Many analyses indicate that rates will continue to trend even lower in 2025. However, we don’t anticipate any break in prices or demand.
How About Inventory?
According to Lawrence Yun, chief economist for the National Association of Realtors, inventory could increase by as much as 30% in 2024, with some markets seeing even faster growth. Many sellers have been holding on to the low rates they were able to obtain five to ten years ago. These people will likely feel confident about selling once rates stabilize at about 6%, unleashing pent up supply.
People WILL Keep Moving
The increase in supply is good news for buyers. Regardless of what’s going on with the real estate market, there are times when people simply must move. One of our most trusted real estate experts, Brian Buffini, identified the top five reasons why people move:
Other common situations that necessitate a move include: changes in employment; life events, such as marriage; and budgetary reasons such as downsizing for retirement.
Millennials Are Eager to Take the Leap
There are over 50 million millennials (people born between the early 1980s and the late 1990s) in the nation. Many of them indicate they would like to purchase their first home, making their generation the largest pool of eligible buyers. This generation has been waiting in the wings for some relief from the higher interest rates and 6% seems to be the magic number that signals the time to buy.
Utah Stands Out
Did you know that Utah has the youngest population in the nation? This makes the predictions about millennials and homeownership particularly relevant in our local market. As we’ve been saying for some time, the secret is out and Utah is now considered a highly desirable place to live. Our cost of living is inching up as we evolve into a mid-size city and continue to welcome lots of people from all over the world. Utah has been named the number one best state overall for 2023 by U.S. News and World Report.
Let’s Find Your Niche
Despite the challenges presented in 2023, Niche Homes was honored to support 80 clients in closing real estate transactions during the year. We worked with people from all walks of life who each had unique reasons to buy and sell real estate. It was a year of remarkable growth for our brokerage; adding more agents and expanding the regions we serve.
As we move into 2024, Niche Homes is as confident as ever in the potential for investing in real estate and the long-term prosperity it can yield. If you have specific questions about your options and how to proceed, please reach out to us.