Market Sneak Peek, 2024

Inman News (a real estate news source) recently interviewed Rick Sharga, CEO of CJ Patrick, a company specializing in Market Intelligence. Some of Sharga's predictions for 2024 are surprising.
No drop in mortgage rates until at least May or June. How do we know? The Fed decided to keep the benchmark interest rate at 5.4%.

Home prices will keep rising slightly. They have been rising about 5% year over year and that trend is not likely to disappear in 2024, says Sharga. Inventory will remain low until rates drop to 5.5% or below (they are about 7% right now). Potential home sellers with mortgages below 4% would double their house payment if they moved. But when rates drop to 5.5% and lower, Sharga thinks that sellers who have held onto to their homes longer than usual will finally sell.

The higher cost of homeowner's insurance will affect many buyers. Whereas in Georgia we used to see insurance running $100 per month, we are now seeing $150 to $185 per month. Sharga's report was nationwide and the insurance problem is much worse in California, Texas, and Florida.

Foreclosure tsunami? Not going to happen, says Sharga, despite what many "YouTubers" are putting out there. Foreclosure activity has been slightly rising, but that comes after a historically low number of foreclosures, so current numbers are still quite low. Homeowners have much more equity than in the Great Crash. There are not many homes making it to auction and few bank repossessions and REO's on the market.

Investors are doing less flips and more rent-and-hold. Flips worked especially well in a market where prices increased dramatically.

Sharga's final comments to summarize the year: "Sales activity for both existing and new homes will increase year over year, probably not to 2022 levels, prices will go up a little bit, foreclosures will be at a minimum, and it will be a couple of years while the market resets."
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SOURCE: Inman News, "Here's what lies ahead for the spring selling market," article by Bernice Ross, February 20, 2024.