Home Prices Will Fall in 2024

Redfin Forecasts Fall of Home Prices in 2024

Good Morning! With snow on the ground and a chill in the air, this weekend is the perfect weekend to dial in your thoughts and strategy to reset for next year. There is a bit of bah humbug as I talk to some agents, fear and exhaustion in others, and a downright excitement to put 2023 behind them and crush 2024 in the rest. We all need to be in the last camp. 😉

On Tuesday this week Redfin released it’s 2024 forecast highlighting what they see as the driving forces for real estate in 2024. In particular, Redfin provides reasons why prices will fall, sales will increase and owners of large rentals might be the winners this year. As I read their forecast, I wanted to highlight a few actionable strategies to thrive and stay ahead of the curve.

The 2024 Housing Outlook: A Time for Optimism and Action

• Home Prices: Redfin predicts a modest decrease in home prices by 1% in the second and third quarters of 2024 marking the first year-over-year decline since 2012. 2023 for all it’s hardship will land up 3% year-over-year with home values hitting all times highs. I personally do not see a 1% drop as a negative, instead, view it as a balancing act in the market, offering opportunities for both buyers and sellers.
• Mortgage Rates: Though still high, rates are expected to gradually decrease, remaining above 6%. This will help increase housing affordability, giving a boost to buyer interest and market activity. Remember, November saw a 16% increase in buyer demand as rates dropped from 8% to 7.15%.
• New Listings: as the lock-in effect eases with lower rates, sellers will see prices flattening and want to sell before prices fall. While I do not see prices falling far, this FOMO will cause some sellers to list while others will go looking for more affordable locations where they can turn their equity into a personal win! More listings = more opportunity.
• Homes Sales: After hitting a low in 2023; home sales are expected to be on track for a 4.1 million pace by 1st quarter and hit a 4.5 million pace by 4th quarter driven by improving affordability and increased supply.

A crucial difference between 2024 and 2023 will be gaining momentum throughout the year instead of losing momentum.

Opportunities Amidst the Shift

• For Sellers: The anticipated listing increase in 2024 means more inventory, but also more competition. It’s crucial to price homes competitively and stage them attractively. As a agent, advise your clients on making their listings stand out.
• For Buyers: The slight dip in prices and rates means enhanced affordability. Encourage potential buyers to explore the market, as this might be their chance to find a value deal.

Despite these changes, high housing costs will persist, particularly affecting young families. As I highlighted in November’s DMAR Market Trends, Denver is home to the highest concentration of millennials; hitting 41% of our population. While we benefited from a 1.9% net gain in millennials earning over 200,000; many are moving here who can not afford to buy. This is going to put our creative juices on overdrive as we look for no and low down options, creative financing, or alternative living situations for our buyers.

As savings has been depleted and student loans kicked in, it will also increase demand for larger rental properties. The opportunity for you and your clients is to look at 2024’s slowing prices and lower rates as an open door to diversify your portfolio to include rental investments. In a recent survey, one in five millennials believe they will never own a home and 12% said they aren’t interested in homeownership.

The Key Takeaway?

There are winners in every market! Stay informed, stay flexible, and stay positive. As real estate professionals, we have the power to turn challenges into opportunities. Let’s embrace this season of renewal as a time to refine your strategies, connect with clients, and build a robust network.

Want more ideas, a winning strategy for investing, or a creative financing partner? Give me a call so we can get to work on making 2024 our best year yet! 😉