For the first time in over 20 years, mortgage rates have hit the 8% mark. This increase has sent shockwaves through the housing market, causing concern for homeowners and potential buyers alike. Here's a summary of a recent (Oct 2023) report from Goldman Sachs.
Question on everyone's mind, "What does this mean for the future of home buying and selling?"
The Outlook for Mortgage Rates Strategists predict that higher rates are here to stay for the foreseeable future. They expect mortgage rates to remain elevated, only dipping to just under 7% by the end of 2024. This news may be disheartening to those hoping for a significant decrease. But remember that this is just a prediction, actual rates could change.
Effects on Home Prices As a result of higher mortgage rates, home prices are also expected to see some changes. Prices will likely end this year at 3.4% year-over-year appreciation. However, the rate of this increase is expected to slow down. Experts predict a modest home price growth of +1.3% in 2024. The main reason for this slowdown is the tight supply of homes on the market, combined with the high mortgage rates making it less affordable for people to buy.
Impact on Home Sales The prediction for 2024 is that existing-home sales will decline to 3.8M, the lowest level since the ‘90s. This significant drop is mainly due to the so-called "lock-in" effect. This simply means that 90% of current mortgage holders have mortgages well below the current rates. As a result, these homeowners are not likely to sell their homes and take on a new, higher-rate mortgage. This will limit the number of homes available for sale, further exacerbating the tight supply situation.
What Does This Mean for You? Prices are not predicted to fall, because homeowners are forced to sell. But mortgage rates aren’t predicted to fall much either.
If want to buy, do it knowing that delaying your move hoping for significantly lower prices or lower rates probably isn’t going to happen. Don’t wait for the “bottom”
If you want to sell, do it knowing that you aren’t going to see another surge in appreciation next year, so move forward with your plan as soon as it makes sense. Don’t wait for another “boom”.
We're returning to a normalized market, slower but steady.
Now that you have the info, you can make informed decisions!
PARKS Real Estate
@wendymondaysellingnashville on social
*learn all about How to Write An Offer
with my 1 min YouTube series