Will 2024 be a good time to buy a house?
As interest rates continue to remain high and a low inventory of homes still plagues many markets, potential homebuyers are wondering if 2024 will be a good time to buy a house.
It’s no secret that this housing market presents unique challenges such with elevated home values and higher borrowing costs due to the Fed. Many real estate market predictions also allude to much of 2023’s song continuing into 2024, albeit with some relief in the inventory department and a dip in interest rates.
Regardless of conditions though, there will still be people who simply need to move in 2024. A life event that triggers a move like new job opportunity or the need to downsize makes moving necessary regardless of the climate. Thankfully, in any market, there are solutions and strategies to implement.
But first and foremost, we’re here to answer the question that everyone else is asking right now, will 2024 be a good time to buy?
So, is it going to be a good time to buy in 2024?
So far, many economists and real estate experts have given their housing market predictions. Some say that 2024 will be more stable than 2023, and others affirm that buyers will still be “feeling the squeeze” next year. Some tell people to wait, others tell people to buy now before more competition floods in after rates lower.
As you can see, nobody has a true crystal ball, but we can take a look at the facts and give potential homeowners a fair judgment on whether it will be worth it for them to buy in 2024.
1. Higher interest rates will mean you need more money to buy.
Mortgage rates will dip, but in our 2024 market outlook, we reported that the majority of experts believe that there will be lower mortgage interest rates, but only around the 6% range. This is still significantly higher than the old rate of borrowing that current home prices were based on. Therefore, it will cost more to borrow, and you’ll need to be financially stable. If you have the right financial situation, then the worsened housing affordability won’t impact you as much.
2. You’ll still have fewer resale home choices compared to previous years.
Lower than normal housing inventory means fewer choices. This also keeps house prices high, much like the previous year. If you plan to buy an existing/resale home, you can expect fewer than normal choices like in 2023. However, this may ease if more people hold off on buying homes, which has already increased inventory in many markets.
In fact, more people are turning to new construction homes because of builder incentives like rate buydowns and zero competition with other buyers. Plus, new homes don’t need roof repairs, new HVAC systems, or updated electric work.
3. You’ll be able to ask for more seller concessions.
When stakes are higher, you can ask for more as a buyer. In a market with fewer qualified buyers, it is taking longer to sell a home than in low interest rate times. Buyers have more leverage when they are a commodity.
As inventory levels slowly grow, this will only make selling a home much harder without giving seller concessions. Therefore, you can ask your real estate agent to negotiate price reductions, repair credits, and more so that the home you buy is worth its future mortgage payments.
4. There will likely be no housing market crash.
When the housing market crashed in 2008-2009, conditions were a lot different than today. One big differentiator is that there was an abundant housing supply that triggered the basic effects of supply vs. demand. With ample supply, great resale homes were a dime a dozen, triggering the price dives of homebuyers’ dreams.
However, in 2024, the lack of lower mortgage rates is only slowly restoring the number of homes on the market. Also, many homeowners are not selling because they don’t want to lose their 3% borrowing rate and lower mortgage payments.
In many markets, competition is still intense, especially for starter homes for first-time buyers. It’s fair to expect some relief from record high prices but not like we experienced 14 years ago.
Buying a Home in 2024: Good or not?
As you can see, conditions are projected to be slightly different compared to last year but with a lot of the same problems and advantages. Overall, it’s a mixed bag. It can be good, or you may need to hold off and wait until when conditions are right for you.
However, there are ways to mitigate the effects of the housing market such as strengthening your personal finances or seeking rate buydowns from homebuilders’ preferred lenders. How else can people still get a good deal in the coming year?
Let’s talk about which buyers can decrease the impact of higher rates if they have to buy a house now.
Which buyers will have an easier time with a home purchase in 2024?
Let’s dive into some ways you can decrease the impact of a more challenging market for buyers.
1. Those who pay all cash.
If you do not even need to think about interest rates, then you already have a huge advantage. Get the upper hand in any deal by having an all-cash payment at the ready. You also don’t have to worry about paying back the principal and the interest of a loan, but you just need to bring the total cost of the home to the table.
Sale prices of homes may decrease in 2024 to lure more buyers, and since cash buyers don’t have to think about interest rates, this discount can be your time to strike.
2. People who can buy down rates.
If you are able to put down more than the typical down payment to avoid PMI, you can also pay down mortgage points to avoid a higher interest rate. By using this method to reduce your interest rate (especially if you have good credit), it’s possible to reduce your mortgage interest rate significantly to reduce how much you pay per month. (Note: This is possible when you have a lump sum of money, typically from home equity.)
- Tip: Buy a new construction home with one of our new construction programs to use your home equity toward a new construction home rate buydown while removing your home sale contingency. Win-win!
3. People who take advantage of builder incentives.
If you buy a new construction home, you can get a mint condition house without the typical problems of a resale home post move in. You can also take advantage of the relationships builders have a preferred blenders which include even more competitive rate buy downs and other financial benefits.
Right now, new construction homes are more popular than resale homes because of the long-term value of not having to fix major systems like roof plumbing and HVAC.
4. When you’re moving from a more expensive market to a cheaper one.
If you have a home that you bought an expensive market, and you’re looking to move to an area that’s considerably more affordable, then you could potentially sell your home for decent equity and pay for all our most your next home with cash.
Real estate markets across America can differ greatly in their average cost, buyer activity, and more. So, if you plan to sell your million dollar flat in Manhattan to move to a spacious single-family house in an emerging market like Birmingham, AL, then it’s safe to say you’ll be just fine.
5. For those moving from a bigger to a smaller house.
Likewise, if you are looking to downsize either to a smaller home or a rental, you can buy a smaller home with your earned equity from a bigger and more expensive property. This allows you to make an advantageous move even within the same market.
While lateral moves aren’t really a thing right now in the same market (just check Zillow to see what similar homes are priced at), you can downsize to an advantage!
6. If you just got a big raise or promotion.
Right now, affordability is top concern for buying a home in 2024. However, if you find that in 2024 you get significantly more income, then it would be easier to qualify for a home in 2024’s proposed landscape. When you have more money to work with, the higher mortgage attributed with the higher just rate will have less of an impact on you compared to having less income.
But what if you just have to move anyway?
If you simply have to move because of an unavoidable life event, we understand how that can be difficult. Especially if you do not have enough equity in your home to make any money off of home sale.
Thankfully, we have solutions in place like Guaranteed Lease that are suited for homes that would otherwise be upside down or underwater during a home sale. Instead of having a short sale, you can turn your first home into a guaranteed stream of rental income. It also allows you to keep the home in your name as your tenants build pay down the mortgage in your home can potentially gain value over time.
If you’re in a situation where you need to move, let us help you explore your options. You got this!
People move in every market. We’re here to help.
Throughout history, people have needed to buy and sell homes in every season, in every day and age. Housing is a universal need and it’s something that will never not be in need. Whether you’re a first-time homebuyer or a seasoned move-up homebuyer, there is still a way to make your American dream happen.
And, if renting looks right to you for a season, we have leasing experts and plenty of homes to choose from that you can explore on our website. In the meantime, we can give you advice on how to prepare for homeownership, such as improving your credit score, debt-to-income ratio, and other metrics that lenders look at.
To start a conversation, set an appointment with one of our reps today.
