2024 Real Estate Market Predictions

January 18, 2024, By: Susan Kadilak

 

Last year, interest rates bounced around like a basketball, leaving buyers and sellers feeling the wrath of the volatile interest rate swings. When rates are under 7%, we see robust home buyer and seller activity locally, but as they creep up some buyers and sellers sit on the sidelines causing things to slow down.

 

One of my clients was able to get a great deal on a home that we put under contract when the rates hit 8%. A month later, they were actually able to take advantage of a lower rate (and $500 a month in savings) when things settled down before we closed.

 

So how will things go in 2024? Check out this year’s predictions below.

 

Will Interest Rates Go Back to 3%?

In short- no. While Federal Reserve Governor, Christopher Waller, recently indicated that interest rates will likely be cut this year, he also said that they “should be lowered methodically and carefully.” So, it looks like it’s going to be a slow go.

 

Given the activity we’re seeing in the market locally when rates dip below 7%, I think this is a wise approach to keep the market from returning to the chaos that ensued starting in 2020.

 

Greg McBride, Bankrate’s Chief Financial Analyst, said “As long as the economy continues to motor along, the new normal of higher rates is here to stay.” 

 

Here’s where the rates are predicted to be by the end of 2024:

 

 

Is the Housing Market Slowing Down?

With the rise in rates, and fewer buyers and sellers in the marketplace, fewer sales are happening. The number of homes sold in Middlesex County, MA, in 2023 (7,650) was down almost 32% when compared to 2022 (10,069 homes).

 

 

Homes are also taking longer to sell. In 2023, homes in Middlesex County took about 32 days to go under contract versus 25 days in 2022. However, that pace is still very much a "Seller’s Market".

 

Unless something drastic happens, we are more likely to see pigs fly than see a "Buyer’s Market" anytime soon.

 

Prices are holding strong with about a 1% increase overall in Middlesex County year over year. In some communities, we saw larger increases, and in others we saw a slight deceleration in prices.

 

The bigger picture here is that we have a serious housing shortage in Massachusetts, and this helps keep prices from falling because we just don’t have enough homes for sale!  

 

Lawrence Yun, Chief Economist for the National Association of Realtors, expects that we will see home prices rise between 3-4% in 2024. Only time will tell!