Predictions for the Housing Market in Q4 2024: What to Expect
As we approach the last quarter of 2024, many are keen to understand the trajectory of the housing market. With various economic indicators and trends in play, it’s essential to analyze the landscape and make informed predictions. Here’s what we can expect for the housing market in Q4 2024.
1. Interest Rates Reducing
After a period of rising interest rates aimed at combating inflation, many experts anticipate a stabilization in rates by late 2024. The Federal Reserve’s approach to monetary policy will be crucial. The Federal Reserve met and rates went down in September. My prediction rates will continue to drop and we should see half a point to a full point drop within a year from now.
2. Pricing Stabilization
In 2024, we saw a stabilization in the housing prices. As long as buyers stay on the sidelines due to rates, the pricing should remain stabilized, however, with the drop in rates, more and more buyers will enter the market causing competition and prices to increase. My prediction is that it will stabilize for the remainder of the year, but next year is a different story. Houses in the $400-600K mark do not stay listed very long and those will continue to sell quickly.
3. Low Inventory Levels
Inventory levels are low. New house builds remain low. The inventory is controlling the market and why prices have stabilized. We don’t see people selling their homes that are currently at a low rate since this will dynamically increase their payments unless they are making a move to their forever home and will adjust their rate later down the road. My prediction is that inventory will remain low for the remainder of the year, but when we see the feds continue to drop, people who have been considering getting into another home with the equity they have gained will be looking to sell come next year. There is a housing shortage in our area, and the need for housing will continue to show itself next year.
4. Shift For Rental Properties
With the ongoing challenges in affordability, many potential buyers may opt to rent instead of purchasing homes. As a result, the rental market could continue to thrive, with increased demand for rental properties. This trend may lead to higher rental prices. With rent being high, it is more cost beneficial to look at owning a home. A lot of first time home buyers are eager to purchase, it is just a matter of when the house is listed in the neighborhood they want.
5. Generational Shifts in Buyer Demographics
The millennial and Gen Z cohorts are becoming increasingly significant players in the housing market. As these younger generations enter their prime homebuying years, we can expect a shift in demand toward properties. The price range these buyers typically enter the market that they can afford are in the $400-$600K price range (in our Central Valley area). Also, with first time home buyer incentives, they can get into a house with a FHA loan with 3.5% down. They will continue to drive sales for the remainder of the year.
Conclusion
The housing market in Q4 2024 is poised for a period of adjustment and opportunity. Interest rates dropped going into Q4 and inventory levels remain low, the market will become more competitive for those who have been waiting to see what rates will do. Prices will continue to remain stable, but as rates drop into next year, prices will depend on inventory levels.
For those looking to enter the market, this could be a promising time to explore options, especially as affordability becomes a key concern for many. As always, staying informed and working with a real estate professional to help guide you through the sale. In my experience, now is a good time to buy. Once more enter the market, competition increases and this starts negotiations and bidding amongst other buyers. It is a sellers market in Q4 2024 and predict it will only continue to be until inventory levels are higher.
