What do we see on the horizon for 2024 for the DC area real estate market? Below are our thoughts, starting with a recap of what we saw in 2023.
What happened in the 2023 market?
- Mortgage rates peaked around 8%. While these rates were not high from an historical perspective, they were a significant and rapid change from historically low pandemic-era rates in the mid 2% range.
- Buyers gained leverage. The increase in mortgage rates dampened buyer demand. As a result, buyers faced less intense competition. There were opportunities to negotiate lower prices and better terms without having to forego inspections and other contingencies.
- Housing supply was low. The increased rates also had an impact on sellers. Many potential sellers opted not to move because they would have to give up their low mortgage rate to take on a new loan. Across the DMV, new listings were down 22.5% compared to 2022.
- Home prices rose despite rate increases. 2023 ended with the median sale price for the year up 2.5% compared to 2022. The limited supply of housing kept prices steady.
What do we expect in the 2024 market?
- Mortgage rates will settle in the 6% range. Rates are now in the 6% range and are expected to stay there in 2024. Additionally, the Fed has indicated they expect to start cutting rates at some point in 2024.[1] The Mortgage Bankers Association projects that the rate for a 30-year fixed mortgage will end 2024 at 6.1%.[2]
- Buyer demand will increase. As rates come down, we expect more buyers to re-enter the market.
- More people will list their homes for sale. Declining rates could bring more sellers into the market. BrightMLS predicts existing homes sales to increase by 8% by the end of the year.[3]
- Home prices are predicted to increase moderately. Experts predict home prices to increase by 3-4% in 2024[4]. Overall, we expect buyer demand to outpace available housing supply and sellers will enjoy a seller’s market. This is especially true in the market for detached houses and rowhouses, whose supply is inherently more constrained than the supply of condos.
Would you like to learn more about your neighborhood or a neighborhood of interest? Are you curious about the value of your home? We're happy to help. Give us a call!
[1] https://www.wsj.com/economy/central-banking/fed-minutes-suggest-hikes-are-over-but-offer-no-timetable-on-cuts-1972be7b
[2] https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/2023/mff_dec23.pdf?sfvrsn=cb984c16_1
[3] https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions/
[4] https://www.bankrate.com/real-estate/housing-market-2024/
