2024… So Far
We are only 45+ days into 2024 and we are anxiously trying to read the tea leaves for what this year will bring. The fact that this is an election year leads most people to assume that the election will be an outsized influence on housing, specifically mortgage rates and pricing. We love hearing the theories, but it is not true. To quote the Cromford Report “the main influence on the housing market comes from policies, not the elections themselves”. Now there is some truth that the stock market responds to elections – at least the last 4 elections saw the stock market respond positively afterwards. The stock market influences the luxury market as well as the 55+ market. Could we see the election affect the stock market again this year? Likely.
But if housing is not directly affected by elections, it leads us right back to the basics – supply and demand. It comes as no shock that demand was tepid at best in 2023 (we are in search of a better description – abysmal?) The good news it appears demand reached bottom in 2023. Demand is now somewhat improved, even if still fairly anemic.
While low demand was grabbing the headlines in 2023, most missed that the supply of homes for sale was actually lower than demand and a greater influence on the market. Sellers hung on to their low interest rates homes and stepped to the sidelines as demand was reacting to soaring interest rates. The result was a very low volume of homes sold. The annual rate of homes sold (sales rate) has stopped falling – but the bad news is it hasn’t risen significantly. The Cromford Report shares this:
We appear to be stuck at the very low rate of between 72,100 and 72,600 closed listings per year across all areas & types. Just 2 years ago we were at 110,000, so we are missing some 38,000 deals compared with then. Mortgage interest rates have been rising again for the last 3 weeks, so a volume breakout is looking unlikely in the short term.
If we were sailors we would call this the doldrums.
What do we expect in 2024? Likely a version of 2023 but with stability in home appreciation and maybe even improved affordability as incomes rise. The below 400K market remains strong for sellers with limited inventory while the luxury market is currently swelling with new supply. Price point seems to be dictating the experience for buyers and sellers. As always we will continue to track 2024 trends and report it here first.
Russell & Wendy
Mostly Wendy