To summarize 2023, what we really saw was inflation coming into check. As far as real estate is concerned, prices were basically flat year over year, which is good for the consumer.
To be honest, we really needed to see even more price corrections than what we saw in order to relieve the expense for buying a home.
Right now, that’s the biggest holdup. Affordability is the main issue right now in the D-FW Metroplex. The reason why we didn’t see more price correction and relief, however, is that we have so many people coming still to this area, and the demand is still very strong.
So, we saw sales volume decrease as far as the amount of homes sold by about 5.3% in the fourth quarter.
Inventory rose 16%. And, that’s something we need to see is inventory rise. That’s our biggest culprit, honestly. The problem is we don’t have enough inventory. And then we also saw new listings rise by 8%. But what we really needed to see was double, triple those numbers to begin to see our market become more balanced.
So, we are still coming out of 2023 in a strong seller’s market, with anywhere from two months inventory to three months. The exact inventory is dependent on which county you are living in, how much new construction there is, etc.
And, just affirming that we’re seeing inflation get in check is that rents only rose 2% for the fourth quarter. So that’s good relief for somebody looking for shelter here in the D-FW metroplex.
And then, what we’re seeing on the interest rate side with the new CPI data and it coming down slowly but surely has helped to bring down interest rates. We saw them really peak out in the fall, September, October, right around 8% or just over 8% for a residential mortgage.
Now, we’re seeing the average national average right now is about 7%. You know, the big question is, what does that look like for 2024?
So, let’s talk a little bit about 2024. Number one, because of the relief in the interest rates at the first of the year, this is this is our firm’s strongest start to the year with the most new contracts we have ever seen come in at this time of year. And so, it tells us that affordability is the biggest issue.
And right now, experts are even predicting interest rates may lower again 3 to 5 times in 2024. I am about 50/50 on the way I see it. I tend to be on the side that I don’t expect to really see interest rates do anything but stabilize throughout 2024, but we will see.
And when I say stabilize, that means bouncing back and forth steadily between 6% and 7% over the course of the year. And really, ultimately, that’s the new, new. And if you look at an average over the last 30 years, you know, we’re really hovering right in that average. We really got so used to the free money for every coming out of the great recession that, you know, it’s taken us almost two years now to get here where we’re beginning to see the consumer, us as consumers, adjust to these more normal type rates.
But as humans, we’re discontent by nature. And so, what we’re seeing is, you know, people will only wait so long to make a move. They’re ready to pay and move on now. They’re going to do what they need to do to get where they want to go – even if it means finally deciding to pay that higher interest rate.
As a market, they’re saying that we should see 30% more inventory coming in than we saw last year. That will be huge relief. We really need to see about 60 to 70% to get the affordability more in check. But if there is a lot of inventory that comes on the market in 2024, it could become more of a buyer’s market or a balanced market than what we’ve seen these past few years.
I’m not convinced that it’s going to.
I really believe it’s going to stick in a seller’s market. We might bounce into a balanced market, but it will come right back to a seller’s market.
And the main reason is DFW is growing. People are coming here in droves still. And we don’t know the numbers yet exactly what came in as far as moved here in D-FW recently, i.e., what the population increase was for 2023, but I’m sure it’s close to 100,000 people.
And you think about how many communities, how many homes, how many apartments, how many everything needs to be in place, the commerce that needs to be in place for that amount of people, much less the million we have here, it’s a lot.
So, that brings us to pricing — and that’s your big question, what is 2024 going to look like on pricing?
Predictions are more flat to down for 2024 on your home prices and what to expect on price appreciation. Most likely, it’ll do this all year hovering around the flat to down mark year over year.
That’s the market update for right now. Inventory is expected to rise, interest rates should come down a little more or stabilize, and prices are expected to hold up though not increase very much throughout 2024.
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