Are you curious about what’s in store for the US real estate market in 2024? We’ve got you covered with some key predictions from real estate experts Wayne Einhorn and Norma Rawlings. Let’s break it down in simple terms:
Average House Prices Stay Steady
The experts predict that the average house price won’t see a significant change throughout the year. However, keep in mind that there might be some variations depending on the region.
Sales Volume on the Rise
Good news for buyers! The overall sales volume is expected to increase by 5% in 2024, thanks to a boost in distressed property transactions. This means more opportunities in the market, with the number of transactions going up from 4.1 million to 4.3 million.
Tight Credit Conditions
Getting a mortgage might continue to be a challenge for buyers. The experts foresee struggles in qualifying for financing, and existing homeowners may find it tough to cope with higher mortgage rates. Currently, the thirty-year rate stands at 6.6%, after hitting a high of 7.8% in October 2023.
Bank of Mom and Dad
Many young adults might still be turning to their parents for down payments. With the ideal mortgage being no more than three times your annual income, this trend is especially prominent in regions like the sun states and the Metropolitan Tri-State area, where houses are less affordable for most.
Federal Reserve Interest Rate Adjustment
Anticipating a move by the Federal Reserve, the experts predict a reduction in the benchmark interest rate from the current 5.5% to 4.75% by the end of the year. This could have implications for borrowing costs and overall market dynamics.
Rise in Bankruptcies
Unfortunately, the real estate market might see an increase in developer bankruptcies, similar to what happened in 2023. This could lead to buyers losing deposits and a decrease in the supply of new housing, further tightening an already limited market.
Rental House Communities on the Rise
In some areas, particularly Arizona, a new trend is emerging – entire communities filled with single-family houses available for rent. The experts predict that this concept will spread across the country, offering more affordable rental options and increasing the supply of rental housing.
In summary, the 2024 US real estate market is expected to see stability in average house prices, a boost in sales volume, challenges in securing financing, potential adjustments to the Federal Reserve interest rate, an unfortunate increase in bankruptcies, and a rise in rental house communities. Keep these trends in mind whether you’re a buyer, seller, or someone just interested in the ever-changing real estate landscape.
2024 CANADIAN REAL ESTATE PREDICTIONS
Unlike its counterpart in the US, the Canadian real estate holds unique characteristics that set it apart. Join us as we delve into the distinctive trends that are poised to shape the Canadian real estate market in the year 2024.
Steady Average House Prices
Buckle up for a stable ride in the housing market. We foresee the average house prices holding their ground throughout the year. While the national picture remains unchanged, keep an eye out for subtle regional variations.
Sales Volume on the Rise
Expect a 5% surge in sales volume. The influx of distressed properties is set to boost the overall market activity, projecting an increase from 443,000 to 465,000 transactions in 2024.
Credit Crunch Ahead
Buyers, get ready to face tight credit conditions. Securing financing may pose a challenge, and existing homeowners could find themselves grappling with mortgage renewal qualifications. With a significant number of fixed-rate mortgages due for renewal, brace for higher refinance rates.
The ‘Bank of Mom and Dad’ Trend Continues
For many in their 20s, 30s, and 40s, parental support remains the key to homeownership. Saving enough for a down payment is a daunting task, especially in cities like Montreal, Toronto, and Vancouver, where house prices far outpace annual incomes.
Bank of Canada Interest Rate Adjustment
Watch out for a potential reduction in the Bank of Canada’s benchmark rate from 5% to 4.25% by the end of the year. This move aims to stimulate economic activity and ease financial pressures.
Developer Challenges and Bankruptcies
Developers might face financial turbulence in 2024, akin to the challenges witnessed in 2023. This could lead to a ripple effect, causing potential homebuyers to lose deposits and further constraining an already tight housing supply.
Changes in Governmental Policy
While the government talks about increasing housing supply, the impact may not be immediate. To address the affordable housing shortage, major industry players, including builders and developers, need incentives. Streamlining approval processes and expanding financing options for these stakeholders are essential steps toward creating a more robust and accessible housing market.
Whether you’re a seasoned investor or taking your first steps into real estate, staying informed is crucial for navigating the complexities of this diverse landscape. Get ready for a journey full of surprises and equip yourself to capitalize on the opportunities that await in this ever-changing market. Stay connected with ICBC for regular updates to stay ahead of the curve and well-informed about the exciting developments on the horizon.