The end of 2023 is around the corner, and many real estate professionals are probably eager to see this tumultuous year close. From 8% mortgage rates to a trial verdict upending commission structures, it hasn’t been an easy year to sell or shepherd buyers. Will 2024 be different? J. Lennox Scott, CEO of John L. Scott Real Estate, tackles that question in his 2024 housing forecast, addressing both professionals and consumers.
Near the forecast’s outset, Scott breaks down the yearly, cyclical peaks and valleys of the real estate market, defined across seasons into six “phases.” Keeping this in mind is useful for gauging your market expectations and what moves to make from there.
For 2024 specifically, Scott predicts that the market will move along this same seasonal pattern—except the overall number of transactions will be lower. In short, a shrinking market.
Scott credits this downsizing with a “convergence” of high mortgage rates influencing buyer behavior—many homeowners aren’t willing to resell when their current mortgage rates are almost half of what they’d be paying if they buy a new home. Less resale properties/sellers means fewer buyers, and thus fewer homes sold.
In his forecast, Scott notes that home price increases are likely to follow in order to make up the difference of low inventory. He thus advises potential buyers to take note of inventory shortages in their local market. “Purchase when the timing is right for you,” he writes.
As for those mortgage rates, Scott doesn’t predict where they will fall (aside from noting that economists predict they will come down), but he does present market scenarios for what will happen in various scenarios.
If mortgage rates remain above 7%: Current market conditions will endure.
If they fall to the upper 6% range: Buyers and listings will increase, the former more than the latter.
If they fall to the Lower 6%s: “Many more buyers” but only “a few more listings.” This “higher intensity” market could see a price increase.
Devin Meenan is an assistant editor with RISMedia.