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The Road Ahead



Around here, we focus on looking forward. But sometimes, it serves us well to look back at where we've been to navigate the road ahead more carefully - especially regarding real estate. To summarize the 2023 real market, we can think of five words. It was a rough road. Mortgage rates hit a high of 7.79%. Average monthly payments increased. Down payments were at their highest in two decades. And inventory was low. Whew. Enough, already.


2024 is here, and the road ahead already appears paved with good news.


Home Sellers Are Coming Back.


While those locked into lower mortgage rates may hold tight for a wee bit longer, experts are predicting a "silver tsunami" - baby boomers who will be downsizing not only in 2024 but in decades to come.


Citing AARP estimates, analyst Meredith Whitney, who predicted the financial crisis of 2008, says that 51% of people over the age of 50 (a group that owns more than 70% of US homes) are set to downsize to smaller homes. This could bring a potential 30 million units of housing into the market. "You'll see a supply-demand dynamic shift," said Whitney, at the Yahoo Finance Investment Conference. "Americans are sitting on a tremendous amount of equity in their homes. It's a question of when they tap into it."




Life events will continue to play a major role in increasing inventory, as many sellers will need to move for job opportunities or change their living situations.





New Home Construction.


And you thought only the stars were bright in Texas? Think again. According to a report by the Chamber of Commerce, it appears Texas outshines all other major cities, ranking #1 in new home construction for 2023, with Dallas coming in second. Home buyers who may be frustrated with the tight (but loosening) market still have plenty of options in our great state. Austin is currently ranked #7 in new construction, and San Antonio is 18th.


Texas is projected to be the most populous state in 2100, according to a study by Movebuddha. With a projected population of nearly 96 million, it will take a combination of new construction and existing home sales to keep pace.


Mortgage Rates Will Stabilize.


After a year of sizzling rates, temps finally began to cool - a trend experts say will continue into 2024. According to NAR, the 30-year fixed-rate mortgage will average 6.3%, and realtor.com is projecting 6.5%. "This will likely improve housing affordability and entice more home buyers to return to the market," said NAR Chief Economist Lawrence Yun at the NAR Virtual Real Estate Forecast Summit.


This data also shows that "rates near 6.6% enable the average American family to afford a median-priced home without devoting more than 30% of their income to housing, the threshold commonly used to measure affordability." For a $500,000 home, this could mean over $400/month savings on a 30-year loan. We'll take it!


Lower Mortgage Rates = More Inventory


This is great news for sellers since lower interest rates mean increased demand, which means home prices could continue to rise. Fannie Mae predicts homes will rise 2.8% year over year by the end of 2024. NAR is predicting a 0.7% increase overall in 2024. Though this will vary market-to-market, Texas will continue to be a hot market, and experts advise potential buyers to prepare financially now and be prepared to pay over asking in some situations.


All in all, sellers and buyers in Texas should see a much better year than 2023 in terms of lower rates, more inventory, and new construction. Of course, many factors remain at play - namely, which path the Feds decide to take in navigating inflation, but we're staying optimistic and betting that 2024 will lead us down the road to recovery.



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