As builders add more housing supply over time, price How to buy an elephant increases should moderate and competition among buyers should ease as well. But it may take several years before we start to see the effects of this. Mortgage rates have dropped a lot this year and may continue to come down in 2025, which will undoubtedly improve affordability for borrowers. This will keep home prices high and likely push them up even further in 2025. Finding a home in your price range may become even trickier, and you may need to make a lot of offers on homes before you get one accepted.

Home price trends

On a more hopeful note, Blake Blahut, a Florida-based realtor with Realty ONE Group Inspiration is confident that inventory will begin to become less constrained in 2024. Another looming issue is the further weakening of commercial property valuations, which may prompt local governments to raise residential property taxes to make up for tax revenue shortfalls. For one, despite high inflation, the economy is holding up remarkably well.

Whether or not 2024 will be the right time to buy a home depends on numerous factors, including economic trends, interest rates and regional market conditions. So what does that mean for the housing market once the predicted recession is in the rearview mirror? “A recession could be the wild card for rates, but, for now, the prospects are axi forex broker for a short, mild recession in 2024, which would not bring mortgage rates down significantly,” Sturtevant said. Economists at the National Bureau of Economic Research (NBER) describe a recession as a prolonged period lasting at least a few months during which there is a significant and widespread decline in economic activity. “Despite the pause, the Fed remains committed to achieving a 2% inflation rate and has signaled that it will not cut interest rates anytime soon,” said Dr. Lisa Sturtevant, chief economist at Bright MLS.

What home sellers should know about the current housing market

If it’s anything like the last crash, where many workers lost their jobs, taking advantage of lower home prices won’t be possible for many homebuyers. And given the current supply conditions, it’s highly unlikely that we’d see prices fall significantly without there being a larger economic fallout. If unemployment rises more than this, we could experience a downturn, which may hurt the housing market and cause prices to go down a bit.

When a housing market doesn’t have enough homes to meet the needs of the people living in that market, home prices and rent costs tend to go up. The year 2020 wasn’t anything like 2008 in the real-estate industry. Rather than implode, the housing market went berserk in the opposite direction. Families with means, tired of being locked in their home, made Zillow the new Netflix. Thrust into a work-from-home experiment, the white-collar labor force drove demand for larger houses with more space for at-home offices. One study from the Federal Reserve Bank of San Francisco found that remote work was a key driver of the rise in housing prices.

The median sales price of an existing home in August was $416,700, the 14th consecutive month of year-over-year price increases, according to the National Association of Realtors. A rate cut by the Federal Reserve this month has fueled hopes that the interest rate-sensitive housing market will soon experience a fresh jolt. A housing market crash akin to the events of 2008 is not expected in 2023. While affordability is low and mortgage rates are high, supply remains very tight, which should keep the market moving, avoiding a major correction. Home prices reached a new record in May 2023, coming in 0.7% higher than the previous peak in June 2022.

If rates cool enough to create a surge in demand, the limited housing inventory could cause prices to shoot back up, making homes unaffordable for more would-be homeowners—especially first-time buyers. Moreover, Hale explains that a housing market crash would also require something that upsets the existing housing balance, namely more supply than there is demand for homes. “Housing affordability fell to a decade-low during the third quarter of 2020,” Robert Dietz, the SVP and chief economist of the National Association of Homebuilders, told Insider. “Given that interest rates are expected to increase, housing affordability will be under additional pressure in 2022.” Mortgage rates are expected to drop further, which should help improve affordability and bring more sellers back onto the market, increasing supply.

Pro Tips for Buying in Today’s Real Estate Market

“Our evidence points to abnormal U.S. housing market behavior for the first time since the boom of the early 2000s,” the Fed researchers wrote. “If you’re trying to pay off or pay down some credit cards, start with the cards or credit lines with the highest interest rates first,” Russell says. “Then, pay off the balances that are smallest. The good news is that if you do this, you’ll improve your debt load and your credit score.” J.R. Russell, head of direct to consumer mortgage lending at Citi Mortgages, says homebuyers should consider paying off credit card balances to improve their scores.

1. In 2017, 2018, and 2019, the Case-Shiller national home-price index set new all-time highs each year.
2. Data from Realtor.com shows that active listings are about half of where they were in 2019.
3. J.P. Morgan Research analysts predict that a major market crash does not lie ahead.
4. Periodic updates may be provided on companies, issuers or industries based on specific developments or announcements, market conditions or any other publicly available information.

Experts generally expect home prices to continue increasing, but the pace of those increases should slow in 2025. Kindleberger’s most popular book was called Manias, Panics and Crashes. The book provides a sweeping history of financial crises, from the currency crisis in the Holy Roman Empire, to “tulipmania” in Holland, to the dot-com bubble in the late 1990s. Experts agree that even if there’s a price correction, it will not be as dire as the 2007–09 housing crisis in terms of magnitude.

If you own a home, refinancing during a recession to lock in a lower mortgage rate could be a good option until the housing market stabilizes. Check with lenders to determine your eligibility and use a mortgage refinance calculator to determine if refinancing is a viable option. Whether the data means we will enter a recession at some point in 2024 or manage a so-called “soft landing” depends on who you ask. Hopefully, all these charts will clear up the confusion for your Uncle Dave or any other Thanksgiving guests who think we’ll see another housing crash like 2008. The most recent housing bubble is borne out of a severe imbalance in the real estate market.

According to NAR, 32% of homebuyers who are buying this year are doing so for the first time. And millennials, many of whom have never owned a home before, have finally surpassed baby boomers as the largest demographic of homebuyers, making up 38% of the market. Fannie Mae sees home prices increasing 6.1% in 7 trading strategies every trader should know 2024 and 3% in 2025. It also predicts that the number of people buying a home will increase by 9.8% next year after ending 2024 down 0.3%. The Mortgage Bankers Association forecasts that home prices will have gone up 3.9% by the end of this year and 2.7% by the end of 2025. Austin, Texas, which has emerged in the past few years as a major tech hub, saw the largest percentage decrease in home sales over the last five years of all 50 major metro areas analyzed by Redfin.