Summer Could Finally Bring Some Good News for Home Buyers, Experts Say
Spring has come and gone, and despite high hopes for a rebound, the housing market remains in a slump. Will the dog days of summer finally bring change?
As of now, buyers and sellers face many of the same challenges they did this time last year: high interest rates, inflated list prices and near-record-low inventory. Still, signs point to more favorable conditions for buyers and sellers in the latter half of 2024.
Here’s how real estate experts predict the next few months will unfold.
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View RatesRising costs and election year uncertainty
One recent development on the radar of industry insiders is the ever-climbing cost of homeowners insurance. Home insurance expenses have already seen a double-digit increase over the past year, and as hurricanes, wildfires and other natural disasters continue to throttle large swaths of the U.S., they will likely keep rising.
Another recent development is a slew of lawsuits relating to real estate commission sharing.
The actions outlined in the largest of these settlements, which involves the National Association of Realtors (NAR), the largest trade association in the U.S., centers on how agents representing homebuyers get paid. Traditionally, sellers paid the commission for both the seller's agent and the buyer's agent (typically around 6% of the sale price, split between the two agents).
As per the ruling, starting in mid-August, agents representing home sellers will no longer be allowed to offer compensation to agents representing buyers on listing databases, a change designed to remove any incentive for buying agents to steer people away from listings that don't offer compensation.
Going forward, more buyers will likely have to negotiate that fee, or pay it outright.
Either way, since 2024 is an election year, with little certainty of how the outcome will impact people's finances, many home buyers and sellers are choosing to stay on the sidelines until 2025.
“Historically, election years can lead to a more cautious approach in the [housing] market," says Rainy Hake Austin, president of The Agency's residential brokerage arm. “Buyers and sellers may adopt a wait-and-see attitude, delaying transactions until after the election."
Prices are down, inventory is up
For many would-be buyers, the cost of buying property is still too high. Fortunately, the tide seems to be turning.
Mortgage rates are finally declining, and should continue to stabilize throughout the rest of the year.
Rates are still in the high 6% range, but every fraction-of-a-percent decrease makes the housing market more affordable for everyday Americans. According to Zillow’s research, a drop to just 6.5% would increase the average home shopper’s buying power by anywhere from $11,000 to $86,000, depending on where they live.
Regardless of how far rates fall, Danielle Hale, chief economist at Realtor.com, says we’ll likely see far less volatility in week-to-week rate changes going forward, giving buyers a much clearer picture of how to budget for a home purchase.
On that front: Home prices are still going up, but the pace of growth is leveling off. According to the brokerage Redfin, prices increased by 0.3% between April and May (the most recent data available), the smallest gain since January 2023.
Inventory is still well below pre-pandemic levels, but the market is shifting in this respect, too.
Homeowners no longer feel "locked in" by their low mortgage rates, and are finally starting to list their properties. And since fewer would-be home buyers are making offers on those properties, more sellers are being forced to cut their asking prices — another boon for previously priced-out buyers.
“The longer rates remain relatively high, the more we will see sellers acclimate to this new normal, and we’ll see more inventory growth,” Hale says.
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