2023 has come to an end, so let’s look at housing predictions for 2024. While I don’t have a crystal ball, I do have my nerdy girl habit of reading articles on the economy and regularly pulling local market statistics. However, next week I will have the opportunity of attending a talk by someone who has been the recipient of three Crystal Ball Awards for the accuracy of his real estate market forecasts. Mr. Barry Habib will be right here in little old Niceville. I’ll let you know if he agrees with what I’m about to say here.
You can’t predict 2024 without looking at what happened in 2023. There are a lot of factors driving the real estate market. Inventory, the economy, home prices and interest rates are the key ones at the moment.
Let’s talk inventory:
6 months of inventory is considered a neutral market. Anything less is considered a seller’s market. 2023 started off with 3.5 months of inventory. Inventory levels never went above 3 months and ended with 2.5 months in December. Less homes to choose from put sellers in the driver’s seat. Many homeowners chose not to put their home up for sale because they are struggling to give up the sub-5% rate of their current mortgage. Lower rates in 2024 will hopefully help homeowners feel more comfortable listing their homes. I would still predict inventory to lean to the seller’s advantage.
Unless you’ve been living under a rock or you are independently wealthy, the economy was tough for the average joe. The robust GDP growth in Q3 2023 and continued resilience by consumers indicate the economy probably won’t start outright shrinking. Making it through 2024 without a recession will make life easier for most households. Going into 2024, continued pressure from relatively high rates and a generally cooling economy should help bring inflation back down to more manageable levels.
The median sales price for a single-family home in Niceville in December 2023 was $499,900; 9.63% higher than $456,000 from December 2022. The average sales price in December 2023 was $575,940; 19.01% higher than $483,939 from December 2022. The average sales price per square foot is a more normalized indicator for the direction of property value. The sales price per square foot in December 2023 was $251, equal to the previous month and 7.73% higher than $233 from December 2022.
A lot of people believe that we will have a market crash. I do not believe Niceville will see this. If you follow homes for sale, what you may have noticed is a lot of price reductions. The sales price to list price ratio in Dec was 96.7% for Niceville. This was the lowest in 3 years. This tells me that while homeowners did not give their asking price, they still saw an increase from 2022. I would expect home prices to remain steady in Niceville. Historically, Niceville is a very stable market.
Rates should level off, and likely, eventually fall. Even if the Fed doesn’t start cutting its benchmark rate until later this year, rates on products not directly tied to the Fed’s actions, like mortgages, could fall. If this happens, housing should get more affordable, even if home prices increase slightly in some areas.
In summary, the housing predictions for 2024 are positive. I expect interest rates to come down slowly. Don’t expect rates lower than the 5’s. Inventory will remain tight. Home prices will stay steady or slightly increase. It remains to be seen if Barry Habib agrees with me. However, Warren Buffett’s move to invest significantly in the housing market is a signal confidence in the industry and he agrees with a positive real estate outlook. We can’t forget that it’s an election year!
If you’re looking for someone to guide you buying or selling real estate, give me a call. Residential or Commercial.