2024 The Year Started on A Positive Note

Fairfield County – The dollar volume of closings in January for Single Family Homes was just over $1B with an increase in the average sales price of 10% from 2023.

Fairfield County – The dollar volume of closings in January for Condos was just over $200M with an increase in the average sales price of 1.5% from 2023.

New Haven County – The dollar volume of closings in January for Single Family Homes was just over $500M with an increase in the average sales price of 15% from 2023.

New Haven County – The dollar volume of closings in January for Condos was just over $1M with an increase in the average sales price of 17% from 2023.

 The FOMC met on January 30-31 and interest rates were kept unchanged. That was somewhat expected, giving the Fed more time to evaluate if the current rate will keep inflation at bay without impeding economic growth too much.

The next policy meeting is on March 19-20, this meeting is associated with a Summary of Economic Projections. Investors and analysts are expecting that rates will hold steady.

Analysts believe the future points to a rate cut by summer. This will depend on the path of inflation and the state of the economy. The Fed’s policy moves depend on what economic data projections are for the upcoming weeks, including employment, productivity, and measures of inflation. They also monitor financial markets, global developments, and credit conditions.

Source:  Investopedia

In Fairfield County and New Haven County we have seen an improvement in new listings by 14% over the past few weeks since December, maybe thanks to a 15% decrease in mortgage rates following the peak of 7.79% in October.

The next Federal Open Market Committee (FOMC) will be meeting on January 30/31.  Many experts believe that the Fed is going to hold rates steady at 5.25-5.50% however the FOMC has signaled several rate cuts throughout 2024 as inflation eases and the economy slows.  The following meeting will be on March 19/20. This meeting will be associated with a summary of the economic projects.

Fannie Mae surveyed a significant number of consumers that say they are expecting mortgage rates to keep falling over the next 12 months.  A vast shift in consumer expectations could free current homeowners from the mortgage lock-in effect* and increase the supply of new listings for sale in 2024.

*The lock-in effect is a disincentive for existing homeowners to sell their homes because they do not want to give up their low rates when buying a new home.

(Sources: Smart MLS, Federal Reserve, Freddie Mac, Investopedia & Fannie Mae)

Fourth Quarter Overview
2023 Real Estate Ended on An Optimistic Note

Fairfield County – The dollar volume of closings in the fourth quarter for Single Family Homes was just under $3.5 billion with an increase in the average sales price of 13.25% from 2022.

Fairfield County – The dollar volume of closings in the fourth quarter for Condos was just over $900M with an increase in the average sales price of 18% from 2022.

New Haven County – The dollar volume of closings in the fourth quarter for Single Family Homes was just under $2B with an increase in the average sales price of 9.82% from 2022.

New Haven County – The dollar volume of closings in the fourth quarter for Condos was just over $400M with an increase in the average sales price of 18.6% from 2022.

Source: SmartMLS 2024

2023 was one of the most challenging years on record for the housing market, with rock-bottom inventory and mortgage rates hitting highs not seen in the past two decades.  The good news  is 2024 predicts to be a calmer real estate market with slight improvements in affordability for buyers.

The housing market is predicted to have more choices again, following a year of low inventory. Sellers are expected to list their homes for sale as they have come to terms with the fact that we appear to be in an era of higher mortgage rates.

An increase in listings will no doubt be refreshing news if you’re shopping for a home. Not only will buyers have more home choices, but an increase in listing for sale could help ease competition in the market.  This in turn could help keep home prices from climbing. Although homes will remain expensive, home buying costs are anticipated to level off.

The gradual decline in rates matched with a chance of a small dip in home prices as inventory increases will start to bring homebuyers some much-needed relief. This combined with steady jobs and paychecks, more stable home prices and less volatile mortgage rates should provide breathing room for buyers struggling with affordability resulting in an increase in home sales.

New to 2024 is “Artificial Intelligence” AI allows sellers to highlight their home’s best features and gives buyers a deeper understanding of a home before they ever step inside with panoramic photos that can be used to generate 3D Home Tours and interactive floor plans. AI will generate more guidance enhancing your home search and financing options.

Source:  Zillow

Forbes.com – Declining mortgage rates—it’s the holiday gift that keeps on giving.

Since hitting a 2023 high in late October, the average 30-year fixed receded below 7% in mid-December for the first time in four months.

The average 30-year fixed rate slid another 28 basis points this week to 6.67%, the eighth consecutive week of decreases, according to Freddie Mac. A basis point is one-hundredth of one percentage point.

Yet, despite this easing, a perfect storm of still-high mortgage rates and home prices amid historically low housing stock continues to put homeownership out of reach for many—most notably first-time buyers—who remain more pessimistic than ever about being able to afford a home as we close in on 2024.

2023 was a demoralizing year for many aspiring home buyers.

Mortgage rates surged—hitting a high of 7.79%—and median home prices in the third quarter were north of $400,000. Moreover, in July, average monthly payments hit their highest level ever at $2,306, according to Intercontinental Exchange, a financial technology and data services provider.

However, 2024 may be a better year to purchase a home—at least for some. While home prices will likely remain elevated—and even increase in some markets—industry experts expect prices in certain areas of the country to soften.

Economists are also optimistic that the Federal Reserve is done with its rate-hiking campaign to lower inflation after policymakers kept the federal funds rate unchanged for a third straight meeting on December 13. The federal funds rate is the benchmark interest rate financial institutions charge each other for overnight loans; it tends to indirectly influence mortgage rates.

Even so, affordability challenges will continue in 2024. Pent-up demand and low inventory will generally bolster prices, and elevated mortgage rates will remain until the Fed implements cuts to the federal funds rate.

Mark Fleming, chief economist at First American Financial Corporation, predicts a “flat stretch” ahead for the housing market. “If the 2020-2021 housing market was too hot, then the 2023 market was probably too cold, but 2024 won’t yet be just right,” Fleming said in his 2024 forecast.

For a housing recovery to occur, Gumbinger says several conditions must unfold.

“For the best possible outcome, we’d first need to see inventories of homes for sale turn considerably higher,” Gumbinger says. “This additional inventory, in turn, would ease the upward pressure on home prices, leveling them off or perhaps helping them to settle back somewhat from peak or near-peak levels.”

And, of course, interest rates would need to cool off.

But Gumbinger says don’t hope they cool too quickly. Rapidly falling rates could create a surge of demand that wipes away any inventory gains, causing home prices to rebound.

“Better that rate reductions happen at a metered pace, incrementally improving buyer opportunities over a stretch of time, rather than all at once,” Gumbinger says.

He adds that mortgage rates returning to a more “normal” upper 4% to lower 5% range would also help the housing market, over time, return to 2014-2019 levels. Yet, Gumbinger predicts it could be a while before we return to those rates.

Source: https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions/