Will 2024 be a good year to buy a home? That’s a question on the minds of many prospective home buyers after 2023 brought the highest mortgage rates in 20 years and low housing inventory.
Austin and DFW will be the hottest housing markets in the country according to the National Association of Realtors, because both have a lot of pent-up demand and are expected to recover faster. NBC 5 Anchor Brittney Johnson spoke with one of the nation’s most prominent housing economists and a prospective homebuyer to break down predictions for 2024.
Vilma Rivera has been searching for a home for her family for four years.
“You always want to make sure that it’s a safe place to be there. I can say that it does get emotional to look for a home,” Rivera said.
The single mom of three started looking in 2020.
“Then COVID hit and so I kind of stopped,” said Rivera.
While she pressed pause on her search, she got a raise and was pre-approved for a larger loan.
“But then the interest rates went up and the mortgage payments and everything, the houses were going up crazy high,” she said. “I wasn’t even able to find mobile homes for that price. And I was like, ‘My God, where am I going to go?'”
So Rivera says that she, her three kids and her dog stayed put in their two-bedroom apartment, but the rent kept rising. She says it jumped from $1,200 to $1,600 a month in four years.
“It is hard and it’s emotional,” said Rivera.
“I’m trying not to give up on the dream of having a home for my kids and having a place for them to run around the yard and just play.”
She’s hoping to find a home under $280,000, which was close to the average home price of $285,000 in 2016 according to the research from the Texas Real Estate Research Center at Texas A & M University. According to a chart from the research center, the average price jumped to more than $480,000 in 2023, making Rivera’s search increasingly challenging.
At the rate Texas is growing, experts expect prices and demand to only go up from here. NBC 5 Anchor Brittany Johnson spoke to Dr. Lawrence Yun, Chief Economist for the National Association of Realtors. When asked about his big predictions for 2024, Dr. Yun said he expects home sales will inevitably rise.
“I believe in 2024, we will see more home construction, more supply, and also some delayed potential home sellers coming into the market. Now that the mortgage rates are coming down,” said Dr. Yun.
He explained that homeowners with rates between 2 and 4% who’ve been afraid to sell and trade for higher ones may be more likely to sell as rates drop, which would boost inventory.
Another boost could come from the Federal Reserve. The Fed announced it would likely cut interest rates up to three times this year. Dr. Yun expects four or five interest rate cuts, which tend to indirectly impact mortgage rates. He says our new normal is around 6% and that people shouldn’t hold their breath waiting for rates as low as 2 or 3%.
“Probably will not happen for the remainder of my lifetime,” he said.
“There are people who are waiting on a market crash. Do you believe they’ll see one?” Brittney asked Dr. Yun.
“We are in a housing shortage situation,” he said. “The logic, supply and demand is suggesting that is out of the question.”
“And what about a place like Texas that used to be known for being so affordable compared to other places? There are people who are saying, I want Texas to get back to that,” Brittney asked.
“It’s going to be difficult. As more people move into the area, more companies relocate to the region, prices look like it’s going to continue to rise. Let’s hope in more moderate fashion with more adequate supply coming onto the market. But for residents, longtime residents who are not homeowners, they should really consider that they don’t want to be left out,” said Dr. Yun.
Rivera is working hard to make sure her family isn’t left out. She is working two jobs and searching for a third. She says she is choosing not to delay any longer, driven by her dream of finding a home to provide more stability and security for her family and their future.
“I picture myself with a big old window in the kitchen, like, being able to look out to my backyard and my kids be there,” Rivera said.
Dr. Yun suggests people do research and find a real estate agent to help them understand their readiness and the market.
You can learn more about housing market forecasts, resources for prospective homebuyers and other resources here.