Real estate outlook for 2024 positive
Real estate agents say that as interest rates fall, more people will buy and sell homes, but the market will not be the same as it was in 2021.
Fox – 13 News
Redfin reports that homes sold below their list price at the height of the real estate season, a development that could change the real estate market to the benefit of buyers.
According to real estate brokerage Redfin, the average selling price of a home sold within four weeks in May and June was 0.3 percent below the asking price.
This data point is important, real estate experts say, because the market reaches its annual peak in late spring and early summer. In recent years, the average home sold for or above list price this time of year. This year, that wasn’t the case.
“This means the housing market is starting to move in buyers’ favor,” said Daryl Fairweather, chief economist at Redfin.
Redfin found that less than a third of homes — 32% — sold above list price in the four weeks ending June 23. That’s the lowest figure for late spring since 2020, when the pandemic hampered the housing market.
This is good news for buyers, but less so for sellers.
Real estate today: “The buyers have the power”
“Overall, we see that buyers have the power, and I see that pretty much everywhere,” said Ryan Sypek, a broker with Compass Real Estate in Los Angeles, California.
That’s a change: In recent months, the real estate market has been brutal for potential buyers.
Both prices and mortgage rates have risen. There is a shortage of new homes. Homeowners are reluctant to sell old homes because most of them have mortgages with historically low interest rates.
Earlier this year, Fairweather told USA TODAY that homebuyers were facing the “most unaffordable housing market in recent history.”
In recent weeks, however, the market has relaxed – at least for buyers.
According to a report from Redfin, new listings increased 8.2% year over year.
More and more homes are sitting on the market: 62 percent of homes listed in May were on the market for at least 30 days, compared to 50 percent two years earlier – a worrying sign for sellers.
“During the pandemic, I had a house that had 60 offers,” Sypek said. “And now, when I have one offer, I’m happy if I get four.”
Home sellers may set their prices too high
Economists say sellers may set their asking prices too high because they don’t realize they are entering a buyer’s market.
“People are setting their prices based on what they saw for their neighbors’ homes three or four months ago. Maybe that was when there were more buyers in the market,” Fairweather said.
In a normal real estate market, sellers tend to set their asking price at or above the amount they expect to get. The same principle drives prices on used car lots, eBay listings, and anywhere else where buyers and sellers haggle over price.
For much of the pandemic, hot markets saw bidding wars between sellers.
“In recent years, it has become normal for sellers to get more than the asking price,” said Danielle Hale, chief economist at Realtor.com. “But this was really an aberration fueled by high demand and low inventory.”
“There are increasingly more affordable homes on the market”
In recent months, the inventory of homes for sale has increased. According to Realtor.com, the number of listings increased 37% from June 2023 to June 2024, the eighth consecutive month of growth.
“We’re seeing more and more affordable homes on the market,” Hale said, a welcome trend for buyers.
In recent years, homebuyers have seen prices and mortgage rates rise rapidly, driving the monthly cost of owning a home to an all-time high.
The median sales price is at a record $397,250, according to Redfin, up nearly 5% from a year ago. The average interest rate on a 30-year fixed-rate mortgage is 7.4%, double what it was in early 2022.
According to Redfin, at current interest rates, the typical homebuyer can expect a monthly payment of $2,785.
Until recently, buyers had little influence.
“During the pandemic, homes sold above asking price, and in some locations they were tens of thousands of dollars above asking price,” Fairweather said.
Housing stock is increasing and offers buyers options
With inventory levels rising and homes unsold, buyers now have options.
The muggy, stormy weather of the past few weeks could be another factor working in buyers’ favor. One reason homes sell well in the spring and early summer is good weather. Last month, however, brought unseasonal heat to much of the country.
“I’ve heard some customers say, ‘It’s so hot outside, I don’t want to see anything,'” said Joe Hunt, a Redfin manager in Phoenix, Arizona, in the June 27 sales report.
Looking ahead, sellers may need to temper their expectations somewhat. They have seen home prices rise by about two-fifths between 2020 and 2022. While prices are still rising, some economists wonder how long this trend can continue.
Homebuyers may lack urgency
“I’m hearing everywhere that there’s just a lack of urgency among buyers right now,” Sypek said. “And urgency and that feeding frenzy are what’s driving up prices.”
However, Sypek points out that the national real estate market is actually a collection of smaller markets, each with its own pulse.
Jess Clegg, broker and owner of Next Nest Real Estate in Seekonk, Massachusetts, says the market in her area remains hot.
“I can tell you I just bought two houses,” she said. “One sold for, I think, $38,000 over asking price, the other for $76,000.”
Michael Maerten, chairman of Tri-County Suburban REALTORS outside Philadelphia, Pennsylvania, says local sellers have achieved 102.7% of the asking price in the last 30 days.
“It’s still a seller’s market here,” he said.
Of course, the asking price is an arbitrary amount: sellers can set it as high or as low as they like. Both Clegg and Maerten advise sellers to work with their real estate agent to find the right amount.
“If you price your home appropriately,” Clegg said, “you will sell it for more than the list price.”
