Last Updated on January 16, 2024
Thinking about dipping your toes into the real estate market in 2024? In today’s post, the top minds at Allen Tate come together to predict what will happen in 2024. While no one has a crystal ball, and we are not economists, our predictions are fairly in line with those of other national real estate publications, so we feel confident this article will paint a fairly accurate depiction of what’s to come in the real estate market.
Interest Rates
Hesitancy to trade in a low interest rate for a higher one, many would-be buyers have been sitting on the sidelines for the last 18 months, causing a large inventory bottleneck. To illustrate the interest rate dilemma and why it’s causing such a kink in the system, here are some interesting statistics:
- 82.4% of homeowners have a mortgage rate below 5%
- 62% have a rate below 4%
- 23.5% have a mortgage rate below 3%, which is the highest proportion with a rate that low on record
Up dramatically from the lower-than-low interest rates we observed during the pandemic housing boom, we finished 2023 with interest rates hovering right over 7%. Many factors will influence interest rates in the coming year. We predict some relief to come this year, partly due to the fact that this is an election year and also as inflation continues to decline towards normal levels. Let’s see exactly what our team of experts predicts for 2024 on the mortgage rate front:
- Pat Riley, Chairman, Allen Tate Companies, predicts mortgage rates will be around 6.5%
- Neal Hanks, President, Allen Tate/Beverly-Hanks, predicts mortgage rates will be around 6.5%
- Phyllis Brookshire, SVP, Operations, Allen Tate Realtors, predicts mortgage rates will be in the 6% range
- Gary Scott, President, Allen Tate Companies, predicts mortgage interest rates will be in the 6% range
Inventory
Inventory is predicted to ease up slightly in 2024, compared to last year. Inventory is measured in Months Supply of Inventory (MSI). To give you a frame of reference, anything below five months is sellers market, five to seven months is a balanced market, and anything over seven months becomes a buyers market. Here’s what our experts had to share on this topic:
Pat Riley: Inventory will be up 5% in the Carolinas. The transfer of wealth, with more and more parents and grandparents co-signing and helping with down payments, should bring some buyers and sellers to the table in 2023.
Neal Hanks: While MSI is always lower in the Carolinas than what we see nationally, we will see inventory ease up. I’m predicting we’ll see an average of 3.6 MSI locally in the Carolinas next year. At some point, would-be buyers will get used to the new normal of higher than average interest rates, which will encourage them to finally move off the sidelines. I also know that builders and developers have been working hard for the last few years to fill the housing void, and that will positively impact inventory as well.
Phyllis Brookshire: In 2024, we’ll see Days on Market (DOM) increase and MSI will follow that. Sellers that have been sitting on the sidelines for the last couple of years will likely price their home like it would have been priced 2 years ago, and as a result, their homes will sit on the market longer.
Price appreciation
Home prices have been rising steadily since 2012, but starting in 2020 and for the next two years, insatiable demand and low interest rates caused home prices to appreciate in the double digits. In early 2023, rising interest rates and increased buyer reluctance caused home prices to flatline. As buyer hesitancy faded, home prices climbed again in 2023, and it is expected that when data is released from the end of the year, the median home price in 2023 exceeded that of 2022. Here’s what our experts are predicting in terms of home price appreciation for 2024:
- Pat Riley: 5.5 % increase
- Phyllis Brookshire: 3.5% increase
- Neal Hanks: 5% increase
- Gary Scott: 5% increase
Good news on the housing appreciation front, as experts across the board predict price appreciation will get closer to normal levels next year. Research shows us that in October 2023, purchasing the typical home with a 30-year fixed-rate mortgage and 20% down payment required 39% of the typical household paycheck. Typically, this figure is closer to 21%, and in 2024, experts predict this to come down, dipping under 30% by the end of the year.
Inflation
Down from its peak in the summer of 2022, inflation continues to ease up after the Fed worked all year to bring it closer to the desired 2% range. Finishing 2023 with an inflation rate of 3.4%, up slightly over November’s 3.1%, it looks like the Fed still has work to do in the new year. Here’s what our team of experts has to say about inflation in 2024:
Neal Hanks: Inflation is coming down and will hopefully end the year in the low 3s, which means fed won’t have to push interest rates.
Pat Riley: I’d love to predict that inflation will end the year at 2.8 or 2.9, but I think it will be closer to 3.2.
Phyllis Brookshire: I’m predicting 3% inflation for 2024.
Now that you have a good idea of what’s in store for the real estate market in 2024, if you’re in the market to buy or sell this year, let the experts at Allen Tate be your guide! Thinking about selling? Get a jump start with a free home physical.
About Allen Tate Realtors
Allen Tate Realtors has been helping our clients achieve their real estate goals since 1957 and is the #1 real estate company in the Carolinas. With local roots and global connections, thanks to our partnership with Leading Real Estate Companies of the World, our real estate agents can provide their customers with superior service, unparalleled connections, and vast market knowledge. Allen Tate provides real estate, mortgage, insurance, and relocation services throughout the entire homeownership lifecycle.
Allen Tate Companies is a proud partner of Howard Hanna Real Estate Services, the largest independent, family-owned real estate company in the country. With more than 13,000 sales associates and staff members across the combined companies, our agents are the best of the best.
