This time of year, we are often asked "What is going to happen with the housing market this year?" We put together a list of 5 predictions for the housing market in 2024
* It is important to note that we have no crystal ball to look into the future, but we do have 35+ years of real estate experience and have sold $400M+ of real estate. These predictions are nothing more than educated guesses and should not be interpreted as such.
1. Chicagoland Suburbs are in demand
Many industries are returning to pre-covid patterns, while others are now permanently changed. With companies being more flexible on working from home, we are seeing more and more clients coming to us looking for more space in the suburbs. This is driving up the demand for bigger homes in the suburbs with amenities and privacy.
This also creates more tax dollars for the suburbs, so if you're an investor, pay attention to what the municipalities are doing with the increased tax revenue.
2. Home Prices are going to continue to increase due to limited supply
The limited availability of inventory is creating a scenario where demand consistently exceeds supply. We expect this imbalance to keep home prices on an upward trajectory. Additionally, the continuation of a strong economy is likely to sustain the high demand.
The prospect of interest rates decreasing adds another dimension. If interest rates continue to decline, home prices will experience even more significant increases. This would compound the already challenging market for prospective homebuyers.
3. We will see a notable increase in the number of homes available for sale
With mortgage rates rising over the past two years, homeowners have been reluctant to sell, opting instead to hold onto the ultralow interest rate on their mortgage. We expect more homes will hit the market as homeowners accept that mortgage rates aren’t falling off a cliff any time soon. Many of those homeowners have had their eye on a home with a bigger (or no) backyard, an extra (or fewer) bedroom, or in their preferred neighborhood across town, and we predict more of these homeowners will end their holdout for lower rates and go ahead with those moves.
4. The new starter home will be a single-family rental
Yes, economists expect a slight increase in inventory and some breathing room as far as affordability goes. Even with this, many buyers will continue to be priced out of the market.
This means the new starter home isn’t one for the homeowner—it’s a single-family rental. The median age of renters is 47 years old, up from 37 in 2000. The good news here could be for investors or homeowners ready to rent out their properties.
5. Interest Rates will stabilize in 2024
As long as the unemployment rate stays low, the Fed will keep interest rates relatively stable. Unemployment currently sits at 3.7%. And while that is still historically low, it’s 15% higher than it was. The Fed might bring rates down a bit but we don't anticipate a huge change. It won’t be a steep decline since that would mean the Fed sees a need to incentivize the economy with lower rates.