As the holiday season approaches, my focus should be on festive family plans, but my thoughts are consumed by the intriguing landscape of the St. George, UT, real estate market.
Stability Persists, No Housing Bubble in Sight
Reflecting on last year's prediction, my prediction of the lack of a housing bubble bursting held true. Despite concerns about high home values and rising mortgage rates, the market in 2023 outperformed expectations. Contrary to some pessimistic forecasts, I find the notion of a market implosion in 2024 highly unlikely.
Mortgage Rates to Ease Gradually
Acknowledging the inaccuracy of last year's forecast regarding the rapid decline of mortgage rates, recent data suggests a more gradual easing in 2024. The resilience of the U.S. economy against the Federal Reserve's interest rate hikes contributes to this. While rates may not dip below 6 percent by year-end, (we can certainly hope!) the trajectory appears favorable according to mortgage experts.
Modest Rise in Listing Activity Expected
Expecting a modest rise in listing activity in 2024, sellers might be hesitant due to not wanting to lose their current favorable mortgage rate. Since 80% of homeowners with mortgages are benefiting from rates at or below 5% and may not be eager to sell at the moment, I anticipate that when rates drop to within 1 percent to 1.5 percent of their current rate, those who were previously hesitant will seriously consider listing their homes for sale.
Home Prices to Experience Modest Growth
Contrary to predictions of falling prices in 2023, the lack of inventory bolstered home values. In 2024, I foresee a modest growth of 1 percent, lower than previous years but indicative of a stable market.
New Construction Gains Market Share
Although new home construction benefits from limited resale supply, it comes at a cost, with builders resorting to price cuts and incentives. This trend, while positive for builders, highlights market complexities.
Worsening Housing Affordability
Affordability challenges persist in 2024 due to rising borrowing costs, limited housing supply, and slow income growth. Young, first-time homebuyers may find it particularly challenging to enter the housing market.
Foreclosure Activity Not Expected to Impact Market
Despite concerns about the end of forbearance leading to a surge in foreclosures, the market remains resilient. While foreclosure starts have increased, they are below pre-pandemic levels, and delinquency levels are expected to return to the long-term average without causing alarm.
Sales to Rise Modestly but Demand Still Outpaces Supply
In contrast to 2023's record-low sales, 2024 is anticipated to witness a modest improvement. However, the demand-supply imbalance will likely continue, favoring sellers.