february 2024
2024
Housing Market Forecast Triangle & Triad Real estate insights
2024 Housing Market Forecast
21.5%
ANNUAL EXISTING HOMES SALES IN 2023
13%
ANNUAL EXISTING HOMES SALES IN 2023
Residential Real Estate in 2023 was characterized by many as an off year. Headlines proclaiming higher interest rates and low housing inventory levels as the end to all things good dominated every news outlet (social and otherwise). In fact, a recent NAR study demonstrated that in 2023 annual existing homes sales declined roughly 19% nationally. In the Triad markets, the decline was about 21.5% (per Triad MLS) and the Triangle market declined about 13% (per Triangle MLS). Yet, in 2023, we at Coldwell Banker Advantage were fortunate to have served over 4,000 people in our Triad/Triangle/Lakes region as well as over 17,800 people across our entire enterprise. Through it all, we focused on providing every client with good information and great service to help them make the best decisions for themselves and, if applicable, their families. In fact, our Triad/Triangle/Lakes agents earned over 4,400 5-Star reviews in 2023 and over 16,300 5star reviews across our enterprise (which include clients who also closed later in 2022). So, one of the biggest questions is, what’s in store for 2024?In one quick answer, it should be better. On a national basis, Fannie Mae is forecasting a 7.6% increase in existing home sales, Mortgage Bankers Association an 8% increase, and National Association of Realtors a 13.5% increase in home sales. Each of these forecasts anticipate a decrease in mortgage interest rates and an improvement in housing inventory. To help share why growth is the overall sentiment of all forecasters, let’s take the residential real estate market and break it down into those key areas; inventory of housing (in total) which impacts pricing and mortgage interest rates which impact affordability.
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Housing availability and PRICES Today, total available inventory of housing remains near historic lows, especially in lowerpriced homes typically sought after by first-time home buyers. These near record lows have kept demand down and therefore, prices high. However, there are signs of some future improvements. One sign is the home builder outlook, which has been low, is beginning to trend back up. The recent National Association of Home Builders (NAHB) Housing Market Index (HMI) shows a growth of builder A score of 50 or above means more builders see good conditions ahead for new construction. At the same time, new national single-family building permits managed to grow throughout 2023. In January there were 748,000 building permits and as of December, that number grew to 994,000 – a steady increase throughout the year all according to the latest data from the U.S. Census Bureau and U.S. Department of Housing and Urban Development. In North Carolina, building permits have continued to trend upwards for the past several years to achieve over 9,200 building permits in December, 2023 alone.
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And notice RaleighCary in December 2023
So does this mean that inventory is going to jump significantly and prices fall in the near term…..no. One large untraditional contributor to the low inventory levels we have been recently experiencing (beyond our normal demand outpacing supply situation of our local markets) is that many homeowners feel “locked in” at low interest rates. And those folks, presently, seem to be unwilling to sell. Yet we all know that lifestyle changes, more than any other cause, are the largest driver of existing home sales. During a recent presentation, NAR Chief Economist, Dr. Lawrence Yun, shared that over the next two years, nationally we will witness :
1 7 million new-born babies 2 3 million marriages 3 1.5 million divorces 4 7 million folks turning 65 years old 5 4 million deaths 6 4 million new jobs 7 50 million job switches
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Given this growing pent-up demand by existing homeowners driven by all the above lifestyle changes and the continued building of new homes, we do believe our total (new and existing home) inventory levels will continue to grow. But does that mean prices will crash in the somewhat distant future…..again, we don’t believe so. North Carolina, and specifically our Triad, Triangle, and Lakes Regions, continue to be destination markets for many. Consider that during the same presentation when Dr. Yun discussed the outlook on lifestyle impact on housing, he also reiterated that in North Carolina payroll jobs in January, 2024 are 28% higher than in 2000. And total payroll jobs in Raleigh are 71% higher than in 2000. These jobs drive wages which drive home purchases. So we do believe our demand by buyers will remain strong.
North Carolina payroll jobs in January, 2024
28%
higher than in 2000
Raleigh payroll jobs in January, 2024
71%
higher than in 2000
Our belief is that more normalized inventory levels (between 4 to 6 mos. of inventory vs the 2 to 3 mos. we have been experiencing) is a healthy market and provides continued appreciation for sellers while providing opportunities for all types of buyers. So we believe we are heading in the correct direction in the markets we serve.
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Mortgage rates and affordability Forecasting mortgage rates, which are dependent on the direction of the 10-year treasury note, has become more difficult to predict. While the Fed will likely reduce the Fed Funds rate several times later in 2024, many people incorrectly assume that the timing and velocity of the Fed Funds direction has a direct correlation to the 10-year Treasury Note. But – experts do believe that mortgage interest rates will come down during 2024. At present, NAR is predicting that 30 year fixed rate mortgages will decline from their recent high of nearly 8% to about 6.1% late in 2024. Mortgage Bankers Association (MBA) is also predicting 6.1% by Q4. And Fannie Mae is going all the way to a forecast of 5.8% by end of year 2024….see the below table.
Mortgage Bankers Association
Fannie Mae
National Association Of Realtors
Q1 2024
Q2 2024
Q3 2024
Q4 2024
6.9%
6.6%
6.3%
6.1%
6.4%
6.2%
6.0%
5.8%
6.8%
6.6%
6.3%
6.1%
(Excerpted from Business Insider January 26, 2024) These decreases directly impact buyer purchasing power and therefore improve overall housing affordability. Just consider the example of a $300,000 loan amount. Excluding taxes, fees and insurances and only thinking in terms of principle and interest, a decrease in mortgage interest rate from 7.8% to 6.3% would mean a decrease of about $303.00 per month….or about $109,080 during the entire length of the loan (assuming full term of 360 payments). And what this also means is that more buyers will be able to come off the sidelines and begin actively search for homes. 5
Conclusion? As stated in the beginning of this write up, 2024 should prove to be a better overall real estate market for both sellers and buyers than in 2023. And, dare I say a better overall experience for everyone. Deciding to sell or buy is a very personal decision for yourself and your family (if applicable). Please know that we stand ready to help you understand the value of your home, provide relevant local knowledge as you are considering a move, or guide anyone on the real estate process based on their individual homeownership needs.
a little about us...
Rick Gregory President & Partner Coldwell Banker Advantage
This article was written by Rick Gregory, President & Partner at Coldwell Banker Advantage. Coldwell Banker Advantage is part of the Coldwell Banker Advantage Family of Companies with approximately 1,900 agents, 65 offices, throughout the Triangle, Triad, Lake Gaston, Kerr Lake, Fayetteville, Southern Pines & Pinehurst, Asheville, Wilmington, New Bern, and Myrtle Beach marketplaces. The Coldwell Banker Advantage Family of companies served approximately 17,897 clients representing more than $6.3 Billion in real estate sales in 2023.
LinkedIn.com/in/rgregory
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