A Review On 2023 And What To Expect In 2024

This year was a riot. Here in Utah, our heavy Winter led to a delayed Spring and Summer real estate market. We started the 2023 year with the lowest housing inventory that we’ve seen in the last 5 years, and that trend continued throughout the entirety of 2023. We experienced a regional bank crisis and some of the most aggressive interest rate hikes that we have ever seen (spoiler alert: expect a change sometime in 2024).

Despite these higher mortgage rates, we still saw a 7.6% rise in the median sales price (January 2023 – December 2023) due to an extremely low level of housing inventory.

So, what should the Utah housing market expect in 2024?

 

Maxwell’s Thoughts

As I reflect on this past year in the real estate market, both Buyers and Sellers fared better than expected. Coming off a strong Seller’s Market from 2020 – 2022, we saw more of a balanced market this past year. This shift towards a Buyer’s Market trend is expected to continue in 2024. But watch out — if our market warms up sooner than expected, then we could easily move back in favor of our Sellers.

Over the last few months, I watched the conversation change from no rate drops predicted to multiple rate drops predicted. While The Federal Reserve tends to be somewhat of a loose cannon, after the drastic drops over the past few weeks, I have found myself in “Team Rate Drops.”

Unfortunately for my Buyers, and fortunately for my Sellers, this means we will see more Buyers enter the market. No doubt, this will lead to multiple offers and bidding wars. While this isn’t the news that Buyers would like to hear, I believe that lower interest rates will be a net positive for the real estate ecosystem. At this point in time, most Buyers are waiting until more favorable conditions present themselves, and then these Buyers will be ready to strike. What we don’t have is enough Sellers wanting to sell, and combined with “on-the-fence” Buyers, this does not make for a healthy economic environment.

Despite the economic environment we find ourselves in, there are some trends to takeaway from the 2023 real estate market.

 

Single Family Home Prices Up Approximately 10-15% Since January

This is a big win for my homeowners! Keep in mind, this price jump has been made possible off the back of a limited housing inventory.

The number of home sales at Utah’s peak season was down nearly 50% compared to 2020’s numbers, and even though we saw the highest interest rates in over a decade, our low inventory enabled the Seller’s Market to continue. I mentioned previously that we have many Buyers looking, but that’s exactly what they’re doing — looking. This has led us to a lower Buyer demand scenario. Once again, this is a win for homeowners. If we saw a significant increase in inventory, we would not have seen the price increases that we did this year.

 

Putting Pressure On Buyer Affordability

This year, we saw interest rates rise rapidly from the high 2’s to the low 8’s, and the burden of hefty mortgage payments is weighing on Buyers.

Unfortunately, there are only a few techniques that can be utilized to get around high interest rates — and reach out to me for more information on that.

The Buyers that are moving to Utah right now are those that can afford their current mortgage payment at higher rates with the hopes of refinancing down the road. Although it is unlikely that we will see 5% interest rates in 2024, I have heard whispers of interest rate drops throughout 2024, so I believe that the peak interest rates are behind us.

 

Where Are The Upgrade Buyers?

Many homeowners had their sights set on upgrading their homes in 2023, but the current market climate put an end to that plan. To put things into perspective, if you got into your home at a 3.25% interest rate, it is almost painful to consider a 6.75% interest rate.

But for those still considering an upgrade, despite the current market conditions, have you considered keeping your current home and leveraging it into the purchase of your next home? It is always a fantastic time to begin building your real estate portfolio.

2024 Market Prediction

In 2024, I expect to see a similar real estate market to 2023: low inventory, higher mortgage rates (compared to what we’ve seen the last few years), and anxiety regarding real estate trends.

With these conversations, it is clear that there is plenty of uncertainty regarding our housing trajectory. However, I am hopeful that 2024 will be the year that breaks our dry spell.

The Housing Authorities are starting off the year strong with a positive prediction when it comes to real estate prices, and we are glad to hear it. Utah historically does better with our real estate (#1 state in home appreciation over the past 30 years, #2 state in home appreciation over the past 5 years), so I expect 2024 to be a good year.

• Note: Utah’s real estate doesn’t do just a bit better, it does overwhelmingly better. Over the past 30 years, our home appreciation has been double the national rate.

Like the Dot-Com bubble in the late 90’s, we are seeing another wave in technology with the growth of Artificial Intelligence. In a more general sense, this growth is concentrated within the “tech” sector of the economy — especially here in Utah. With many tech companies continuing to expand into Utah, I foresee a ton of wealth creation over the next few years.

 

Why Sell In 2024?

Prices Are Up

It is safe to say that home prices are back on the up-and-up. There was a slight dip in prices this year, but what followed are the rapid increase in prices you see today.

Remember that when all of the stars align (list price, condition, etc.), Sellers are still achieving phenomenal outcomes. There are plenty of homes that have rotted on the market, or been removed completely, due to an incorrect marketing strategy. I am hoping that come the Spring and Summer market, we will see these properties return with a more robust, comprehensive Digital Marketing Campaign.

 

Opportunity Cost of Not Selling

While many prospective home sellers feel apprehensive about making a move right now, there is still plenty of opportunity when it comes to financing your home.

For those who have been in their home for over 5 years, they are likely sitting on upwards of $100,000 in equity. The question to ask yourself is, “What is the highest and best use of this equity?”

Depending on your unique circumstances, it may be a wise decision to relocate this money. Homeowners in today’s market are using their home equity to kick off their real estate investment portfolios, invest into starting a business, paying off high interest debt, and much more.

 

When Life Happens

In this business, we Realtors® constantly remind ourselves of this one thing: there will always be people that are looking to buy or sell. Even for the most apprehensive homeowners, sometimes they are forced to make a move. This can be for an array of reasons, such as divorce, death, a new job, and so on. Whatever the reason may be, there are incentives to be a Seller this next year.

 

Why Buy in 2024?

Lack of Competition

For those of you who were actively buying in 2020 and 2021, you know first hand how discouraging the market was. With my own Buyers, we were continuously put into bidding wars of 15 – 20 people and asked to make offers 10, 20, or even 30 thousand above asking price. However, with one of my Sellers, we were even able to sell the property for $165,000 above asking price.

The Buyer pool is less competitive than we have seen over these past few years, but that could change on a dime. We have yet to see a flood of Buyers, but it is common knowledge that open house attendance rates are on the incline. This signals to me that there are still plenty of people that are interested in Buying, they just need a factor or two to fall into place. These Buyers will become your competition.

Right now we are operating within a window of time where Sellers are willing to make concessions, and Buyers are not having to compete as much.

 

Takeaway

It is a fool’s game to attempt to time the market, and Buyer and Sellers almost always lose when playing that game. Although no one has a crystal ball, there are still signs of a market shift to watch out for, allowing you to make informed decisions.

Whether you believe it’s a good time to move or not, I urge you to really (I mean REALLY) consider the other side of the coin. Remember that home values will continue to rise, and Buyer competition can shift quickly, so you’ll want to be ready and waiting. This year I watched as countless Buyers and Sellers missed their home opportunity because they were not prepared.

As a Real Estate Professional, I am dedicated to helping my clients understand their options in order to be confident in their decisions. Whether it’s moving,  or deciding to stay put, I will continue to be an advocate. So, pick up the phone, shoot me a direct message, or email me to get started!

 

Email: maxwell.nelson@cbrealty.com

Phone: (801) 309-8435

Instagram: @maxwellsellsrealestate