Yahoo Finance I’m a Real Estate Agent: 3 Reasons I’m Optimistic About the Market in Summer 2024
In some respects, the real estate market in the US has been on a roll in recent years, with housing prices rising by around 15% over the past three years, according to Redfin data. Yet at the same time, many prospective buyers are frustrated by high mortgage rates and high listing prices, causing some to hold off on purchasing.
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Meanwhile, some sellers have been reluctant to sell, due to not wanting to give up their low mortgage rates obtained during the pandemic. That, combined with sluggish housing construction, has contributed to low housing inventory.
As of early 2024, there’s a shortage of around 1.5 million homes in the US, according to the National Association of Home Builders.
In turn, that has contributed to rising prices. But there are some recent signs that conditions are improving, and real estate deals could flow more freely this summer, particularly in favor of buyers.
One unique opportunity shared by Jared Antin, managing director and licensed associate real estate broker at Elegran Real Estate, is the potential for buyers to secure a deal with less competition and more favorable negotiation terms.
“This advantage is likely to dissipate once interest rates start to drop,” Antin added.
Meanwhile, buyers may be able to take advantage of three main factors over the next three to six months that are aligning in their favor, according to Antin. Here are three reasons to be optimistic about the market this summer.
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Interest Rates Have Not Budged Much
The Federal Reserve has kept interest rates at the same level since July 2023, and while the Fed does not directly dictate mortgage rates, it has a strong influence.
Over the past year, 30-year fixed-rate mortgages have fluctuated a bit — only going between 6.6% and 7.79% — and they’re currently sitting at 6.87%, according to Freddie Mac. That’s around where they sat about six months ago, so despite some mild movements, there hasn’t been much easing overall.
With rates still elevated, that could keep some prospective buyers on pause, thereby lowering competition for buyers ready to act.
Once rates start falling more, however, that could cause more buyers to rush in, said Antin, causing prices and the number of deals to jump. So, some might prefer to act before that potentially happens.
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Inventory Is Increasing
Although many areas of the US still have low housing inventory, conditions are starting to improve. For 32 straight weeks, inventory of active homes for sale has increased compared to the prior year, with current inventory up 36% from a year ago, according to Realtor.com.
So, if inventory keeps increasing, that could also help reduce competition and moderate housing prices. Buyers may be able to reduce instances of feeling like they have to settle for what’s available or overbid on a competitive property.
Sellers Are Overconfident
Another issue Antin pointed out is that sellers have become a bit overconfident in how much they’re asking for when listing their homes.
According to Redfin, around 19% of homes had price drops as of the latest data in May 2024, whereas the year before, only about 13% had price drops.
If sellers continue to be overconfident, that could cause homes to sit on the market for longer, which can push prices down and give buyers additional negotiating power.
The Takeaway
Together, all of these issues could lead to a solid real estate market this summer, particularly from the perspective of buyers.
According to Antin, “The combination of these factors means that demand is still moderated due to high interest rates and elevated home prices, which shifts some leverage toward buyers. Patient buyers can identify motivated sellers and secure a more advantageous deal.”
That’s not to say that buyers will easily find a home this summer, but those who do find a good deal can potentially benefit both now and in the future.
“For those who are financially prepared with the liquidity for a down payment and can handle the current higher interest rates, there is a significant opportunity,” continued Antin.
“If they find a house they love, they can benefit from less buyer competition now, refinance when rates drop and potentially lock in future equity growth as home prices are likely to rise when interest rates decrease and transaction volume surges.
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This article originally appeared on GOBankingRates.com: I’m a Real Estate Agent: 3 Reasons I’m Optimistic About the Market in Summer 2024
