housing inventory Archives - Amora Escapes https://amoraescapes.com/tag/housing-inventory/ Property 101 Wed, 31 Jul 2024 13:13:59 +0000 en-US hourly 1 https://amoraescapes.com/wp-content/uploads/2022/11/Amora-Escapes-Favico.png housing inventory Archives - Amora Escapes https://amoraescapes.com/tag/housing-inventory/ 32 32 Housing Market Predictions for the Next 2 Years https://amoraescapes.com/2024/08/19/housing-market-predictions-for-the-next-2-years/ Mon, 19 Aug 2024 12:35:27 +0000 https://amoraescapes.com/?p=5280 The US housing market has been on a wild ride in recent years. Soaring home prices fueled by historically…

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The US housing market has been on a wild ride in recent years. Soaring home prices fueled by historically low mortgage rates created a frenzy of buyer activity. However, the tide seems to be turning. Rising interest rates have cooled buyer enthusiasm, leading to slower sales and questions about the future.

While the surge of recent years might be moderating, experts predict a future with steadier home price appreciation, potentially with some regional variationsMortgage rates are likely to remain elevated compared to historic lows, impacting affordability for some buyers. However, a gradual increase in housing inventory could offer more breathing room for those still in the market.

Let’s find out some of the expert predictions for the next two years in the US housing market. We’ll explore what’s in store for home pricesmortgage rates, and housing inventory.

Housing Market Predictions for the Next 2 Years: Hot or Not?

Forecast for Home Prices:

Home prices have been a major focus in the US housing market, with many wondering if the upward trend will continue. Experts offer a range of predictions, with some nuance depending on location:

  • Modest Appreciation: Many analysts anticipate a shift from dramatic price increases to a more moderate pace of appreciation, potentially around 1-3% annually. This is due to the combined effect of higher borrowing costs and a potential increase in available homes.
  • Limited Price Dips: A few experts suggest a possibility of slight price dips in some overheated markets, particularly if mortgage rates continue to climb. However, these declines are likely to be minor and localized.
  • Regional Variations: Keep in mind that the housing market isn’t a monolith. Predictions may vary significantly depending on the specific region. Areas with strong job growth and limited inventory could see more stable or even slightly rising prices, while slower-growth regions might experience a more pronounced cooling effect.

Forecast for Mortgage Rates:

Mortgage rates have been a key driver of the housing market frenzy, and their recent rise has significantly impacted affordability. Experts offer some insights into what homebuyers can expect for the next two years:

  • Rates Likely to Stay Elevated: The consensus among most analysts is that mortgage rates will likely remain above their historic lows. Predictions range from the mid 6 % to the low 7 % range for the next 24 months. This is due to the Federal Reserve’s efforts to combat inflation by raising interest rates.
  • Potential for Fluctuations: While a sustained upward trend is expected, some experts predict there could be periods of slight rate fluctuations. This could be influenced by economic data releases or policy changes by the Federal Reserve.
  • Impact on Affordability: Higher mortgage rates will undoubtedly impact affordability for some buyers. However, some analysts suggest this could eventually lead to a more balanced market with increased inventory as some buyers may choose to wait for rates to come down.

Forecast for Housing Inventory:

Housing inventory has been a major pain point for buyers in recent years. Low supply and fierce competition created bidding wars and drove prices up. Experts offer some insights into what’s on the horizon for housing inventory:

  • Gradual Increase Expected: Many analysts predict a gradual increase in available homes for sale over the next two years. This could be due to several factors:
    • 1. Shifting Market Dynamics: Higher interest rates may incentivize some homeowners who locked in ultra-low rates to stay put. However, others facing life changes or financial pressures might decide to sell, adding to the inventory.
    • New Construction: While not a major short-term solution, an increase in new home construction activity could eventually contribute to a more balanced inventory level.
  • Regional Variations: Similar to home prices, the availability of homes for sale will likely vary by region. Areas with strong job markets and limited housing options might see a slower rise in inventory compared to markets with a cooling housing sector.
  • Not a Buyer’s Paradise (Yet): It’s important to manage expectations. While an increase in inventory is a positive sign, it’s unlikely to swing the pendulum completely to a buyer’s market in the next two years. The overall supply is likely to remain below pre-pandemic levels.

For buyers, this could translate to a less frantic buying experience with potentially more time for deliberation. However, competition might still exist, especially for desirable properties.

Predictions for Regional Market Variations:

The US housing market is a complex tapestry woven from numerous regional trends. While national forecasts offer a general outlook, significant variations are expected across different parts of the country. Here’s what experts predict for regional markets:

  • Sun Belt vs. Northeast/Midwest: The Sun Belt region (South and Southwest) is likely to see continued growth, albeit potentially at a slower pace. This is due to factors like favorable weather, job opportunities attracting migration, and a larger pool of existing homes. In contrast, the Northeast and Midwest might experience a more pronounced cooling effect, with potentially lower price appreciation or even slight dips in some areas, particularly those with slower job growth.
  • Coastal vs. Non-coastal: The affordability gap between coastal and non-coastal areas is likely to widen. Rising interest rates could price out some buyers in traditionally expensive coastal markets, leading to a more balanced market or even price corrections. Conversely, non-coastal areas with a lower cost of living could see continued steady growth.
  • Hot vs. Cold Markets: “Hot markets” that experienced explosive price surges in recent years might see a more significant moderation in price growth or even slight declines. Conversely, markets that haven’t seen dramatic price increases might experience more stable or even slightly rising prices, especially if they have strong local economies.

Remember, these are broad regional trends, and specific cities within each region could deviate from them based on local factors like job market strength, new construction activity, and overall housing stock.

Latest Houing Market Snapshot: June 2024

Recent data by N.A.R. provides a clearer picture of the current housing market conditions. Existing home sales faded by 5.4% in June 2024, achieving a seasonally adjusted annual rate of 3.89 million units. This decline represents a significant drop of 5.4% compared to one year prior.

The median existing-home sales price, however, saw a remarkable rise of 4.1%, climbing to $426,900 in June. This marks the second consecutive month that the price reached an all-time high, and it is the twelfth straight month of year-over-year price gains. All four major U.S. regions reported price increases.

Interestingly, the total housing inventory at the end of June rose to 1.32 million units, an increase of 3.1% from May and a substantial increase of 23.4% year over year. This inventory translates to a supply of approximately 4.1 months at the current sales pace, up from 3.7 months in May and 3.1 months in June 2023.

NAR Chief Economist Lawrence Yun noted, “We’re seeing a slow shift from a seller’s market to a buyer’s market.” As homes sit longer on the market and sellers receive fewer offers, buyers are becoming more discerning, often insisting on home inspections and appraisals. This shift illustrates that while prices are rising, the market dynamics are beginning to stabilize.

Tips to Buy & Sell a Home in These Next 2 Years:

Buyers: Conquering the Market in Higher-Rate Times

The rise in mortgage rates presents challenges for buyers, but there are still strategies to navigate this market:

  • Get Pre-Approved: Knowing your budget upfront is crucial. Getting pre-approved for a mortgage gives you a clear picture of your affordability range and strengthens your offer.
  • Consider Adjustable-Rate Mortgages (ARMs): ARMs offer a lower initial interest rate compared to fixed-rate mortgages. However, be aware that the rate can adjust after a set period, potentially impacting your monthly payments. Carefully evaluate your financial stability and long-term plans before considering an ARM.
  • Explore Financial Assistance Programs: For first-time homebuyers, various government programs and down payment assistance initiatives can help bridge the affordability gap. Research local and state programs to see if you qualify.

Sellers: Standing Out in a Shifting Market

As the market cools, sellers need to adapt their strategies to attract buyers:

  • Price competitively: Conduct thorough market research to determine a fair and competitive asking price. Overpriced homes are likely to sit on the market longer.
  • Enhance Curb Appeal: First impressions matter. Invest in landscaping, minor repairs, and a fresh coat of paint to make your home visually appealing to potential buyers.
  • Highlight Unique Features: Showcase what makes your property special. Do you have a beautiful backyard, a recently renovated kitchen, or a desirable location? Emphasize these features in your marketing materials.
  • Work with a Reputable Real Estate Agent: A skilled agent can guide you through the selling process, offer valuable negotiation advice, and help you navigate the changing market conditions.

Conclusion: Navigating the Evolving US Housing Market

This new landscape presents both challenges and opportunities. For buyers, careful budgeting, exploring different loan options, and potentially waiting for the right moment is key. Sellers need to adapt their strategies by offering competitive pricing and highlighting the unique features of their homes.

Overall, the US housing market remains a complex system with regional variations and ongoing economic influences. While a cautious approach is warranted, the future isn’t all doom and gloom. By understanding the trends and employing strategic planning, both buyers and sellers can navigate this evolving market and achieve their real estate goals.

Source: Norada

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