The Housing Market Has Shifted. Now What?
Happy New Year! We trust that you enjoyed a delightful holiday season, enjoyed time with family and friends, and had the opportunity to slow down for a few days before heading into the new year.
The past year proved to be quite a roller coaster of ups and downs in the real estate market. As interest rates went UP, market demand went DOWN. Although this brought a lot of fear into the market, it helped to bring about a more balanced market. After three-plus years of extreme market appreciation, low inventory, high demand and high competition, the market finally took a deep breath. Buyers were able to get out and see homes without having to get in the door within five minutes of listing, affording the ability to negotiate and present offers that did not sacrifice rights to appraisal and inspection.
Despite a lack of remarkable over-asking price offers, sellers did not lose much of the equity they gained over the last three years. In fact, according to DMAR statistics, the average closing price of residential homes — both attached and detached — at the end of November 2023 stood at $659,152, marking a 0.4% increase from November 2022. So, although we had a year of uncertainty with higher interest rates and decreased buyer demand, stability prevailed.
What does the market look like as we head into 2024? As interest rates in the sixes and sevens are the “new normal,” accompanied by seller concessions towards buyer costs, some of the market insecurity will ease. Change is hard, and after a year of adjustment, more buyers and sellers will likely get into the market in 2024. Economists predict a reduction in interest rates during the first half of the year, which should also spur increased buyer and seller activity. Once that happens, we may very well return to a more competitive market. Market trends show that even a small decrease in rates triggers heightened buyer interest.
Buyers: if you are interested in purchasing a home in the first two quarters of 2024, do not sit on the fence too long. The sellers on the market right now are ready to make deals, more willing to negotiate buyer concessions, and there is less buyer competition. As we head into spring, we will see prices increase along with activity.
Sellers: if you are planning to sell in the first half of 2024, don’t procrastinate getting ready. Taking care of deferred maintenance and completing some “freshening up” like new carpet and paint will make your home a shining star and result in a quicker sale for a higher price.
The Steller Group is committed to supporting you in achieving your real estate goals in 2024. Reach out to us in the new year and let us know how we can assist you on your journey!