Just the Facts In the real estate world, the year 2024 is poised to be a period of transition and adjustment. Key indicators point to a dynamic market. According to data from entities like the National Association of Realtors and Redfin, the median existing-home sales price stood at $407,100, marking a 3.9% year-over-year increase. Concurrently, the median asking price of existing homes for sale was $389,950, up by 4.6% year-over-year. However, the seasonally adjusted annual rate of existing home sales had dipped by 15.3%, with the inventory of unsold existing homes down 14.1%, reflecting a market that’s both robust and strained​​.

People Who Say Yes There are forecasts suggesting a downtrend in real estate values in 2024. Experts like Andrew Lokenauth of BeFluentInFinance predict a 5-10% drop in home prices nationally due to softening demand, affordability issues, and economic uncertainty. Similarly, Morgan Stanley anticipates a 2% fall in home prices next year. Specific cities like Austin, Texas, and St. Louis could see significant declines in home prices, with projections of a 12.2% and 11.7% dip, respectively​​​​. Moreover, the commercial real estate sector is not immune to this trend, with property values expected to fall by an additional 10% in 2024, following an 11% decrease this year​​.

People Who Say No Contrasting viewpoints exist, however. Some experts, including those from CBRE and Zillow, predict either a stabilization or a slight increase in home values. CBRE, in its 2024 U.S. Real Estate Outlook, foresees compelling buying opportunities as transaction values decline, driven by resilient consumer spending countering economic headwinds like high interest rates. Zillow’s forecast calls for a negligible 0.2% fall in home values, suggesting a relatively stable market. Additionally, the urban exodus trend, propelled by remote work, hasn’t fully plateaued, which may drive demand in suburban and exurban regions, potentially pushing up housing prices​​​​​​.

The real estate market’s trajectory in 2024 will undoubtedly be influenced by several factors, including mortgage rates, inventory levels, and buyer-seller dynamics. With the Federal Reserve’s policy decisions playing a critical role, mortgage rates are expected to be lower on average in 2024 compared to 2023, albeit not as low as some forecasters initially predicted. The rates are likely to fluctuate, averaging in the 5-7% range, influenced by factors such as inflation and labor market conditions​​. Inventory levels, meanwhile, are expected to show some increase in new home construction, but the inventory of existing homes for sale may remain flat, as many homeowners are locked in by low interest rates on their current mortgages. This could continue the housing shortage, especially considering the reluctance of existing homeowners to sell​​.

In terms of market dynamics, some experts foresee a continuation of a strong seller’s market, driven by high demand and limited inventory. Others, however, anticipate a shift towards a more balanced market, giving buyers slightly more leverage. This shift is expected to be influenced by factors like rising inventory and regional housing conditions​​.

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