The ups and downs experienced in the real estate industry in recent years—in both interest rates and available housing inventory—have been well documented. So, what are experts expecting in 2024?
Bluegrass Realtors provided some context in a written statement.
“Since the end of the pandemic, the housing market has been slowly returning to normal. During the past 2.5 or so years (from 2020 through 2022), real estate in the Bluegrass, and across the nation, experienced a surge in activity as interest rates fell to all-time lows and sales and prices hit record highs. This was not sustainable long-term, and we saw that over the course of the last year.”
What comes next hinges on the Fed’s decisions on interest rates, the statement continued. Experts including the Mortgage Bankers Association are predicting continued rate drops, perhaps as low as 6% by the end of 2024, prompting a return of buyers to the market, more competition for housing and a possible rise in multiple offer situations.
“All indications are that prices should continue to grow as they have for 56 consecutive months as of October 2023, with appreciation over the last year remaining in the single digits year-over-year. If demand spikes with lower rates, however, prices could return to a higher appreciation rate.”
“Getting into the market sooner rather than later, even though rates are still a little higher than what has been the norm over the past couple of years, may be the right decision for many home buyers,” said Bluegrass Realtors President Kelley Nisbet. “While rates may come down a bit in the months ahead, the increasing price may offset those savings and as rates drop, competition will increase as more buyers join the market. If rates continue to drop, buyers can always look to refinancing as an option to lower rates and mortgage payments.”
Pam Featherstone, president of Kentucky REALTORS for 2024 president, says even with unprecedented change in interest rates and other economic uncertainties of daily life, if one can afford to, “now is the absolute best time” to buy a home.
Though we may never see the 2, 3 and 4% interest rate era again, rates will decrease, albeit slowly. As they do, more buyers will enter the market, inflating home prices and resulting in multiple offer situations, especially as more homes are needed to accommodate newcomers to the state and existing residents looking to change homes.
Featherstone says Realtors are working closely with local and national government officials to explain the impact real estate has had on the housing market and issues surrounding the lack of attainable, affordable housing.
“It’s going to take a contingency of all of us working together to get that achieved,” she said.