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THE 2024 HOUSING MARKET: Home prices have just recently hit yet another all-time high in November after rising for 10 straight months - more and more Americans are beginning to rush back into the housing market with record down payments - and nearly HALF of those surveyed on Twitter said that they were likely to buy a house in the next 2 years.
WHY THE REAL ESTATE MARKET MIGHT DECLINE IN 2024:
1. LOW AFFORDABILITY CNN reported that “38.6% of the median household income is required to make the monthly payment on the average home purchase” - and, typically a home is considered “affordable” if the monthly cost is less than 30% of the area’s median income. This, unfortunately, has resulted in 99% of the United States being unaffordable for the average American making $71,000 per year.
2. HIGHER UNEMPLOYMENT Since 1955 - "the U.S. economy has always experienced a recession within two years from every quarter in which inflation was above 4% and unemployment was below 5%, as they are today.”
3. CHANCE OF A RECESSION According to Realtor.com, “A recession in 2024 would likely weaken housing demand beyond its current low level, and if it were significant enough, it could stress existing homeowner finances enough to prompt some to sell, reversing the supply-demand balance that we’ve seen in the last few years.”
4. EVERYONE THINKS IT'S A BAD TIME TO BUY A HOME Only 16% of people believe that now is a good time to purchase a home, which is a record low.
WHY THE REAL ESTATE MARKET MIGHT CONTINUE GOING HIGHER:
1. LOWER INTEREST RATES Jerome Powell indicated that we’re likely going to see 3 rate cuts in 2023 of 25 basis points each, which would take the federal funds rate down to 4.5%, and likely leave us with mortgage rates leveling off around the 5.5-6.5% range.
2. MORE SELLERS IN 2024 Recent research suggests that the “30-year fixed-rate mortgage falling to 5.5% is the "magic mortgage rate" that would be enough to push more home buyers to purchase homes.”
3. THE US IS NOT IN A RECESSION According to Jerome Powell, the economy is gearing up for a Soft Landing in 2024 because inflation is largely under control, GDP is strong, and consumer spending is robust.
4. SEASONALITY COULD BE THE ONLY DROP IN PRICES Even though most seasonal pricing tends to be a difference of 8-12% off the sales price, some locations, like the Northeast and Great Lakes, lead the nation with a “22.1% variation between summer and winter sales,” which means right now could be a good time to negotiate.
5. HOUSING, LONG TERM, TRENDED HIGHER (SO FAR) Over the last 100 years, housing prices have steadily increased as new construction constantly lags the growing population.
HOW TO PREPARE:
1. GET A 30 YEAR MORTGAGE A 30-Year mortgage gives you the flexibility to still make a lower minimum payment and save the extra money if the circumstances require it.
2. GET A FIXED INTEREST RATE This prevents your payments from suddenly being increased 5-7 years in the future if interest rates are somehow higher than they are today.
3. REFINANCE IF RATES GO DOWN This allows you to save more money on your monthly payments.
4. AVOID SELLING IFYOU DON’T NEED TO Ideally, by not selling, you’ll have the time to ride out any fluctuations in price long enough for them to recover and bring you back to profitability.
5. ALWAYS KEEP CASH ON THE SIDELINES - JUST IN CASE The reality is, anything can come up, at any point, that will end up costing you money.
*Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. This is not investment advice.
