Are we on the brink of a housing market crash in 2024? Let's find out what's true. With home prices soaring and mortgage rates fluctuating, the stakes are high. According to recent data from the National Association of Realtors, median home prices in Bellevue, WA, homes for sale have surged by 15% over the past year alone. In this article, we'll discuss the looming specter of a housing market crash, reviewing economic indicators, historical patterns, and regional disparities to provide a thorough view of the future.

Will there be a decline in housing sales?

Lawrence Yun, Chief Economist of the National Association of Realtors (NAR), has assessed the current state of the U.S. housing market. He points out that high mortgage rates and low inventory are the major factors influencing the market in 2023. Yun expects an 18% decline in home sales this year, following a 17% reduction last year. The 30-year fixed mortgage rate reached a high of 8%, affecting the overall economy.

Yun also highlights the high prices of houses for sale Seattle, WA, driven by a lack of inventory, makes it difficult for first-time buyers to enter the market. Despite these challenges, he believes that interest rates have peaked and expects them to drop to 6-7% by spring. This could lead to more sellers entering the market. Additionally, newly constructed homes play a vital role in dealing with the housing shortage.

Yun believes that current home sales will increase next year and anticipates a boost in buying when international buyers return to the market. Selma Hepp, Chief Economist at CoreLogic, agrees that lower mortgage rates would stimulate home sales activity. She projects an increase in sales for 2024 compared to 2023. Lower rates could encourage
more sellers to list their homes, increasing inventory and transactions.

Will the housing market crash in 2024?

While home prices have rocketed in recent years, experts generally believe that the housing market will experience a correction rather than a crash. A major and sudden drop in home prices is considered unlikely.

A key factor that supports this outlook is the economy's resilience, despite high inflation. A housing market crash normally requires an imbalance where supply exceeds demand. Given the limited inventory and expected increase in buyers with declining mortgage rates, it is unlikely that supply will surpass demand to the extent that it triggers a crash.

However, there are concerns for 2024. If the labor market weakens and pushes the economy into a recession, more homeowners might need to sell their homes to access equity, which could boost supply and lower prices. Another concern is the devaluation of commercial properties, which could lead local governments to raise residential property taxes to cover for lost revenue.

Is the housing inventory likely to increase?

To see an improvement in inventory levels, either a large number of existing homeowners need to list their properties or there needs to be a surge in newly constructed homes. Both scenarios seem somewhat unreal, but experts project a slight increase in housing inventory in 2024. There should be more home construction and a greater desire among existing homeowners to sell.


 

Will home prices witness a decline or a further spike?

The connection between prices and inventory will keep prices up. Many home sellers are hesitant to trade their low-interest mortgages for higher ones, keeping inventory tight. While more homeowners may sell over time due to life events, inventory is unlikely to see a substantial increase. As a result, prices are not expected to fall year-over-year unless demand declines drastically.

How can prospective buyers prepare for today’s market?

Buying a home is challenging due to high prices and mortgage rates. Monthly mortgage payments are likely to be double what they were 3 years ago. To cope, some buyers are looking in cheaper areas away from big cities, spending more money, or settling for smaller homes. Despite the challenges, the market is less competitive than before, allowing buyers to save money and possibly get discounts.

If you are interested in the Bellevue housing market, you should be cautious to avoid financial risk. With record-high home prices, high financing costs, and rising insurance costs, finding a bargain is difficult. Being prepared to walk away can be a wise choice. Saving more money, improving credit, and researching different areas can help buyers find the best fit.

Will 2024 be a buyer’s market or will it continue to be a seller’s market?

Limited inventory gives sellers a big advantage. The high number of buyers compared to available homes makes each listing highly sought after. Without an increase in the number of homes on the market, the seller’s market is not going to change next year.

Expectations regarding interest rates and supply suggest that demand will continue to surpass supply, similar to current conditions. Supply is expected to remain below what is considered a balanced market. While low inventory will remain a challenge, high mortgage rates might impact demand, maybe leading to a more balanced market in 2024. Sellers might need to make more concessions, such as covering closing costs or offering rate buydowns.

Last Words of Advice

In conclusion, a housing market crash in 2024 is unlikely. While high mortgage rates and low inventory present challenges, the market is expected to face a correction rather than a crash. Prices may settle or increase slowly, with a slight rise in inventory anticipated. For buyers, this means staying prepared and cautious, while sellers may still hold an advantage but might need to offer concessions. Overall, the housing market is set for a gradual adjustment rather than a dramatic collapse.