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Mid-Year Real Estate Market Update for 2024: What Buyers and Sellers Need to Know

Last December, when the Federal Reserve projected a series of benchmark rate cuts in the coming year, some analysts speculated that mortgage rates—which had recently peaked near 8%—would fall closer to 6% by mid-2024.^1,2,3

Unfortunately, persistent inflation has delayed the central bank’s timeline and kept the average 30-year mortgage rate hovering around 7% so far this year.²

While elevated mortgage rates have continued to dampen the pace of home sales and affordability, there have been some positive developments for frustrated homebuyers.

Nationwide, the inventory shortage is starting to ease, and an uptick in starter homes coming on the market has helped to slow the median home price growth rate, presenting some relief to cash-strapped buyers.⁴

There are also signs that sellers are adjusting to the higher rate environment, as a growing number list their properties for sale.⁴

Still, economists say a persistent housing deficit—combined with tighter lending standards and historically high levels of home equity—will help keep the market stable.⁵

What does that mean for you?

Read on for our take on this year’s most important real estate news and get a sneak peek into what analysts predict is around the corner for 2024.

Mortgage Rate Cuts Will Take Longer Than Expected

At its most recent meeting on May 1, the Federal Reserve announced that it would keep its overnight rate at a 23-year high in response to the latest, still-elevated inflation numbers.⁶

While mortgage rates aren’t directly tied to the federal funds rate, they do tend to move in tandem.

So, while expected, the Fed’s announcement was further proof that a meaningful decline in mortgage rates—and a subsequent real estate market rebound—is farther off than many experts predicted.

“The housing market has always been interest rate sensitive.

When rates go up, we tend to see less activity,” explained Realtor.com chief economist Danielle Hale in a recent article.

“The housing market is even more rate sensitive now because many people are locked into low mortgage rates and because first-time buyers are really stretched by high prices and borrowing costs.”⁷

Many experts now speculate that the first benchmark rate cut will come no sooner than September, so homebuyers hoping for a cheaper mortgage will have to remain patient.

“We’re not likely to see mortgage rates decline significantly until after the Fed makes its first cut; and the longer it takes for that to happen, the less likely it is that we’ll see rates much below 6.5% by the end of the year,” predicted Rick Sharga, CEO at CJ Patrick Company, in a May interview.⁸

What does it mean for you?

Mortgage rates aren’t expected to fall significantly any time soon, but that doesn’t necessarily mean you should wait to buy a home.

A drop in rates could lead to a spike in home prices if pent-up demand sends a flood of homebuyers back into the market.

Reach out to schedule a free consultation so we can help you chart the best course for your home purchase or sale.

Buyers Are Gaining Options As Sellers Return To The Market

There is a silver lining for buyers who have struggled to find the right property: More Americans are sticking a for-sale in their yard.⁹

Given the record-low inventory levels of the past few years, this presents an opportunity for buyers to find a place they love—and potentially score a better deal.

In 2023, inventory remained scarce as homeowners who felt beholden to their existing mortgage rates delayed their plans to sell.

However, a recent survey by Realtor.com shows that a growing number of those owners are ready to jump in off the sidelines.¹⁰

While the majority of potential sellers still report feeling “locked in” by their current mortgage, the share has declined slightly (79% now versus 82% in 2023).

Additionally, nearly one-third of those “locked-in” owners say they need to sell soon for personal reasons, and the vast majority (86%) report that they’ve already been thinking about selling for more than a year.¹⁰

Renewed optimism may also be playing a part.

“Both our ‘good time to buy’ and ‘good time to sell’ measures continued their slow upward drift this month,” noted Fannie Mae Chief Economist Doug Duncan in an April statement.¹¹

However, the current stock of available homes still falls short of pre-pandemic levels, according to economists at Realtor.com.

“For the first four months of this year, the inventory of homes actively for sale was at its highest level since 2020.

However, while inventory this April is much improved compared with the previous three years, it is still down 35.9% compared with typical 2017 to 2019 levels.”⁴

What does it mean for you?

If you’ve had trouble finding a home in the past, you may want to take another look. An increase in inventory, coupled with relatively low buyer competition, could make this an ideal time to make a move.

Reach out if you’re ready to search for your next home.

If you’re hoping to sell this year, you may also want to act now.

If inventory levels grow, it will become more challenging for your home to stand out.

We can craft a plan to maximize your profits, starting with a professional assessment of your home’s current market value.

Home Prices Are Rising At A More Manageable Pace

Homebuyers struggling with high borrowing costs have something else to celebrate.

The national median home price has remained relatively stable over the past year, due to sellers bringing a greater share of smaller, more affordable homes to the market.⁴

In addition to offering cheaper homes, a recent survey found that home sellers are also adjusting their expectations when it comes to pricing.

In many regions, just 12% anticipate a bidding war (down from 23% last year) and only 15% expect to sell above list price (versus 31% in 2023).¹⁰

But buyers shouldn’t expect a fire sale.

According to Realtor.com’s April Housing Market Trends Report, “On an adjusted per-square-foot basis, the median list price grew by 3.8%, as homes continue to retain their value despite increased inventory compared with last year.”⁴

Dr. Selma Hepp, chief economist for the data firm CoreLogic, projects that home prices will keep rising at a gradual pace through the rest of 2024.

“Spring home price gains are already off to a strong start despite continued mortgage rate volatility. That said, more inventory finally coming to market will likely translate to more options for buyers and fewer bidding wars, which typically keeps outsized price growth in check.”¹²

What does it mean for you?

An increase in more affordable housing stock is great news, especially for first-time buyers.

And with home values expected to keep rising, an investment in real estate could help you build wealth over time.

Reach out to discuss your goals and budget, and we can help you decide if you’re ready to take your first step on the property ladder.

Desire to Own Persists, But Affordability Remains An Obstacle

Surveys show that the American dream of homeownership is alive and well, despite the financial challenges.

In fact, a recent poll by Realtor.com found that 55% of Millennial and 40% of Gen Z respondents believe that now is a good time to buy a home.¹³

According to Fannie Mae Chief Economist Doug Duncan, buyers are starting to adapt to the new economic reality.

“With the historically low rates of the pandemic era now firmly behind us, some households appear to be moving past the hurdle of last year’s sharp jump in rates, an adjustment that we think could help further thaw the housing market.

We noted in our latest monthly forecast that we expect to see a gradual increase in home listings and sales transactions in the coming year.”

The Realtor.com study also revealed that even a small drop in mortgage rates could give a big boost to homebuyer demand and affordability.

In fact, 40% of the buyers polled would find a home purchase attainable if rates fall under 6%, and an additional 32% plan to enter the market if rates dip below 5%.^13I

But waiting for rates to drop isn’t the only approach that Americans are using to afford a home.

A survey by U.S. News & World Report found that determined homebuyers are employing a variety of strategies, including shopping multiple lenders (52%), purchasing discount points to lower their rates (36%), and opting for adjustable-rate mortgages (36%).

More than three-quarters of today’s buyers also hope to refinance to a lower rate in the future.¹⁴

Despite the obstacles, these respondents remain steadfast in their desire to own a home, listing financial benefits, stability, and more space as their top motivations for wanting to buy.¹⁴

What does it mean for you?

If you’re dreaming of a new home, let’s talk.

We can help you evaluate your options and connect you with a mortgage professional to discuss strategies you can use to make your monthly payments more affordable.

And remember, in many cases, you can refinance if rates drop in the future.

If you have plans to sell, it will be crucial to enlist the help of a skilled agent who knows how to maximize your profit margins and draw in qualified buyers.

Reach out for a copy of our multi-step Property Marketing Plan.

We’re Here to Guide You

Ken and Libby Guthrie, Guthrie Group Homes, Knoxville TN Real Estate

While national housing reports can give you a “big picture” outlook, much of real estate is local.

And as local market experts, we know what’s most likely to impact sales and drive home values in your particular neighborhood.

As a trusted partner in your real estate journey, we can guide you through the market’s twists and turns.

If you’re considering buying or selling a home in 2024, contact us now to schedule a free consultation.

Let’s work together and craft an action plan to meet your real estate goals.

The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, or tax advice. Consult the appropriate for advice regarding your individual needs.

Sources:

CBS News – https://www.cbsnews.com/news/federal-reserve-rate-decision-pause-december-13/
Bankrate – https://www.bankrate.com/mortgages/historical-mortgage-rates/
Fannie Mae – https://www.fanniemae.com/media/50096/display
Realtor.com – https://www.realtor.com/research/april-2024-data/
Bankrate – https://www.bankrate.com/real-estate/is-the-housing-market-about-to-crash/
NPR – https://www.npr.org/2024/05/01/1248454950/federal-reserve-inflation-interest-rates
Realtor.com – https://www.realtor.com/news/trends/will-the-fed-cut-interest-rates-2024-housing-market/
The Mortgage Reports – https://themortgagereports.com/32667/mortgage-rates-forecast-fha-va-usda-conventional
Fast Company – https://www.fastcompany.com/91106568/housing-market-inventory-rising-across-country-maps
Realtor.com – https://www.realtor.com/research/2023-q1-sellers-survey-btts/
Fannie Mae – https://www.fanniemae.com/research-and-insights/surveys-indices/national-housing-survey
CoreLogic – https://www.corelogic.com/press-releases/corelogic-us-annual-home-price-growth-slows-still-up-by-over-5-february/
Realtor.com – https://www.realtor.com/research/america-dream-survey-feb-2024/
US News & World Report – https://money.usnews.com/loans/mortgages/articles/2024-homebuyer-survey

Real Estate

Can I Buy or Sell a Home Without a Realtor or Real Estate Agent?

One of the most common questions that Realtors get is, “Can I Buy or Sell my Home Without Using a Real Estate Agent?” Here’s what we have to say on the subject.

Today’s real estate market is one of the fastest-moving in recent memory. With record-low inventory in many market segments, including our own, we’re seeing multiple offers—and sometimes even bidding wars—for homes in the most sought-after neighborhoods.

This has led some sellers to question the need for an agent. After all, why spend money on a listing agent when it seems that you can stick a For Sale sign in the yard then watch a line form around the block?

Some buyers may also believe they’d be better off purchasing a property without a Realtor.

For those seeking a competitive edge, proceeding without a buyer’s agent may seem like a good way to stand out from the competition—and maybe even score a discount.

Since the seller pays the buyer agent’s commission, wouldn’t a do-it-yourself purchase sweeten the offer?

We all like to save money. However, when it comes to your largest financial asset, forgoing professional representation may not always be in your best interest.

Find out whether the benefits outweigh the risks (and considerable time and effort) of selling or buying a home on your own—so you can head to the closing table with confidence.

SELLING YOUR HOME WITHOUT AN AGENT

Most homeowners who choose to sell their home without any professional assistance opt for a traditional “For Sale By Owner” or a direct sale to an investor, such as an iBuyer. Here’s what you can expect from either of these options.

For Sale By Owner (FSBO)

For sale by owner or FSBO (pronounced fizz-bo) offers sellers the opportunity to price their own home and handle their own transaction, showing the home and negotiating directly with the buyer or his or her real estate agent.

According to data compiled by the National Association of Realtors, approximately 8% of homes are sold by their owner.¹

In an active, low inventory real estate market, it may seem like a no-brainer to sell your home yourself. After all, there are plenty of buyers out there and one of them is bound to be interested in your home.

In addition, you’ll save money on the listing agent’s commission and have more control over the way the home is priced and marketed.

One of the biggest problems FSBOs run into, however, is pricing the home appropriately. Without access to information about the comparable properties in your area, you could end up overpricing your home (causing it to languish on the market) or underpricing your home (leaving thousands of dollars on the table).²

Even during last year’s strong seller’s market, the median sales price for FSBOs was 10% less than the median price of homes sold with the help of a real estate agent.¹ And during a more balanced market, like the one we experienced in 2018, FSBO homes sold for 24% (or $60,000) less than agent-represented properties.³ This suggests that, while you may think that you’ll price and market your home more effectively yourself, in fact, you may end up losing far more than the amount you would pay for an agent’s assistance.

Without the services of a real estate professional, it will be up to you to get people in the door. You’ll need to gather information for the online listing and put together the kind of marketing that today’s buyers expect to see.

This includes bringing in a professional photographer, writing the listing description, and designing marketing collateral like flyers and mailers—or hiring a writer and graphic designer to do so.

Once someone is interested, you’ll need to offer virtual showings and develop a COVID safety protocol. You’ll then need to schedule an in-person showing (or in some cases, two or three) for each potential buyer.

In addition, you’ll be on your own when evaluating offers and determining their financial viability. You’ll need to thoroughly understand all legal contracts and contingencies and discuss terms, including those regarding the home inspection and closing process.

While you’re doing all of this work, it’s likely that you’ll still need to pay the buyer agent’s commission. So be sure to weigh your potential savings against the significant risk and effort involved.

If you choose to work with a listing agent, you’ll save significant time and effort while minimizing your personal risk and liability. And the increased profits realized through a more effective marketing and negotiation strategy could more than make up for the cost of your agent’s commission.

iBuyer

iBuyers have been on the scene since around 2015, providing sellers the option of a direct purchase from a real estate investment company rather than a traditional direct-to-consumer sales process.⁴ iBuyer companies tout their convenience and speed, with a reliable, streamlined process that may be attractive to some sellers.

The idea is that instead of listing the home on the open market, the homeowner completes an online form with information about the property’s location and features, then waits for an offer from the company.

The iBuyer is looking for a home in good condition that’s located in a good neighborhood—one that’s easy to flip and falls within the company’s algorithm.

For sellers who are more focused on speed and convenience, an iBuyer may offer an attractive alternative to a traditional real estate sale.

That’s because iBuyers evaluate a property quickly and make an upfront offer without requesting repairs or other accommodations.

However, sellers will pay for that convenience with, generally, a far lower sale price than the market will provide as well as fees that can add up to as much or more than a traditional real estate agent’s commission. According to a study conducted by MarketWatch, iBuyers netted, on average, 11% less than a traditional sale when both the lower price and fees are considered.⁵ Other studies found some iBuyers charging as much as 15% in fees and associated costs, far more than you’ll pay for a real estate agent’s commission.⁶

In a hot market, this can mean leaving tens of thousands of dollars on the table since you won’t be able to negotiate and you’ll lose out on rising home prices caused by low inventory and increased demand.

In addition, iBuyers are demonstrably less reliable during times of economic uncertainty, as evidenced by the halt of operations for most iBuyer platforms in early 2020.⁶ As a seller, the last thing you want is to start down the road of iBuying only to find out that a corporate mandate is stopping your transaction in its tracks.

If you choose to work with a real estate agent, you can still explore iBuyers as an option. That way you can take advantage of the added convenience of a fast sale while still enjoying the protection and security of having a professional negotiating on your behalf.

BUYING YOUR HOME WITHOUT AN AGENT

With a Buyers Agent in Your Corner, you can…

According to the most recent statistics, 88% of home buyers use a real estate agent when conducting their home search.¹

A buyer’s agent is with you every step of the way through the home buying process. From finding the perfect home to submitting a winning offer to navigating the inspection and closing processes, most homebuyers find their expertise and guidance invaluable.

And the best part is that, because they are compensated through a commission paid by the homeowner at closing, most agents provide these services at no cost to you!

Still, you may be considering negotiating your home purchase directly with the seller or listing agent, especially if you are accustomed to deal-making as part of your job. And if you are familiar with the neighborhood where you are searching, you may feel that there is no reason to get a buyer’s agent involved.

However, putting together a winning offer package can be challenging. This is especially true in a multiple-offer situation where you’ll be competing against buyers whose offers are carefully crafted to maximize their appeal. And the homebuying process can get emotional. A trusted agent can help you avoid overpaying for a property or glossing over “red flags” in your inspection. In addition, buyer agents offer a streamlined, professional process that listing agents may be more likely to recommend to their clients.

If you decide to forego an agent, you’ll have to write, submit, and negotiate a competitive offer all on your own. You’ll also need to schedule an inspection and negotiate repairs.

You’ll be responsible for reviewing and preparing all necessary documents, and you will need to be in constant communication with the seller’s agent and your lender, inspector, appraiser, title company, and other related parties along the way.

Or, you could choose to work with a buyer’s agent whose commission is paid by the seller and costs you nothing out of pocket. In exchange, you’ll obtain fiduciary-level guidance on one of the most important financial transactions of your life. If you decide to go it alone, you’ll be playing fast and loose with what is, for most people, their most important and consequential financial decision.

SO, IS A REAL ESTATE AGENT RIGHT FOR YOU?

It pays to sell with a real estate agent

It is important for you to understand your options and think through your preferences when considering whether or not to work with a real estate professional.

If you are experienced in real estate transactions and legal contracts, comfortable negotiating under high-stakes circumstances, and have plenty of extra time on your hands, you may find that an iBuyer or FSBO sale works for you.

However, if, like most people, you value expert guidance and would like an experienced professional to manage the process, you will probably experience far more peace of mind and security in working with a real estate agent or broker.

A real estate agent’s comprehensive suite of services and expert negotiation skills can benefit buyers and sellers financially, as well. On average, sellers who utilize an agent walk away with more money than those who choose the FSBO or iBuyer route.^3,5

And buyers pay nothing out of pocket for expert representation that can help them avoid expensive mistakes all along the way from contract to closing.

According to NAR’s profile, the vast majority of buyers (91%) and sellers (89%) are thrilled with their real estate professional’s representation and would recommend them to others.¹

That’s why, in terms of time, money, and expertise, most buyers and sellers find the assistance of a real estate agent essential and invaluable.

QUESTIONS ABOUT BUYING OR SELLING? WE HAVE ANSWERS

The best way to find out whether you need a real estate agent or broker is to speak with one. We’re here to help and to offer the insights you need to make better-informed decisions.

Let’s talk about the value-added services we provide when we help you buy or sell in today’s competitive real estate landscape.

Sources:

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