Estimated read time: 6-7 minutes
SALT LAKE CITY — Housing prices and mortgage rates are both expected to decrease in 2024. But before would-be home sellers and homebuyers get too excited about what sounds promising on the heels of 2023's very challenging housing market, the changes are expected to be slight through 2024, the housing market relatively flat and still challenging for many.
Deseret News checked out housing and rental market predictions from Realtor.com, Zillow, Forbes and Redfin to identify potential trends in the housing market, from rentals to sales, including both new and existing housing. Here's how experts say 2024 is likely to shake out for those looking to move:
Mortgage rates will likely fall — but not enough to make a huge difference. Mortgage rates seem to be backing off their recent high of 7.79%. And virtually all predictions say the rates will creep down slightly but stay above 6%, which is well above the low rates just a few years ago and higher than the rates currently enjoyed by 90% of those who carry a mortgage. In fact, two-thirds of mortgage holders have rates below 4%, making big moves for them unlikely.
Home prices will stay flat or drop slightly — less than 2% — in most areas, though there are exceptions and it doesn't mean buying will be affordable for many people. The median home price was a bit higher in 2023 than in 2022.
Realtor.com reported that since May 2022, buying a typical home with a 30-year, fixed-rate mortgage and a 20% down payment "meant forking over a quarter or more of the typical household paycheck." And as interest rates rose in October 2023, that was 39%, while the historical average was 21%.
Realtor.com predicts the share of median income will be just under 30% by the end of 2024, helped by income growth, that slight dip in home prices and a bit of a decrease in mortgage rates. Realtor.com says the typical purchase cost should slip to just under $2,200 a month.
Per Forbes, "the median monthly housing payment hit an all-time high of $2,715 in 2023, up 12.6% from 2022, according to a Redfin report, which labeled 2023 the least affordable year on record for homebuyers."
Home sales may increase some, but won't surge. As mentioned, most mortgage holders have lower interest rates now than they can get so the majority are not planning to sell their homes and buy a different one. They can't match the rate they already have.
The housing market is tight, too, with not much home building, though new construction has picked up in recent months.
Zillow predicts, however, that some would-be sellers will recognize the market's not turning around quickly as the interest rate remains high. So they may decide to sell anyway, while housing prices are elevated.
"I don't expect to see a meaningful increase in the supply of existing homes for sale until mortgage rates are back down in the low 5% range, so probably not in 2024," Rick Sharga, founder and CEO of CJ Patrick Company, a market intelligence and business advisory firm, told Forbes.
For now, renting could be more affordable in most markets, compared to buying. The cost to rent will go down some in 2024 — again, not much. Rental vacancy rates are a bit higher than they were before the completion of more than 385,000 multi-family units in 2023. Most of the forecasts say that fact could help drop the cost of buying a bit by year's end as home sales compete with the cost to rent as an affordable option.
And some would-be sellers may decide to move, but keep their existing home as a rental property and see what the market does beyond 2024. If that happens, the single-family starter home may be a rental, per Zillow.
For young adults looking to buy a starter home, 2024 may not be very friendly. Mortgage rates will still be high and the median cost of a home expensive, so saving a down payment may require renting longer until an individual's numbers line up.
Those who do buy homes are more apt to buy homes that need some do-it-yourself work as a way to keep their costs down, Zillow predicts. And experts say that people looking to buy a home may compete with "house flippers" for homes that need work.
Young adults may opt to stay renters and give up on buying, maybe permanently. Per Redfin, "We're already seeing signs that young people are redefining the American Dream; nearly 1 in 5 millennials who responded to a 2023 housing survey believe they'll never own a home. For some, renting is not a choice: Nearly half of those survey respondents said homes for sale are too expensive and a similar share said they can't afford to save for a down payment. But others just prefer renting: 12% said they aren't interested in homeownership and 7% said they don't want to put in the effort to maintain their own home."
Rental demand seems to be increasing near some city centers. Zillow says rental demand is surging in downtown New York City and that could be a trend in other markets, too. As Deseret News reported earlier this year, walkable and public-transportation-friendly communities where people live near their work are seeing a renaissance and offer health benefits, too.
Multifamily construction is likely to boom, especially as Redfin predicts that local governments will increasingly tackle housing affordability.
But if… then…
Predictions wouldn't mean much without a few "but if… then" caveats. Those unpredictable circumstances that could change the picture include what the Fed does with mortgage rates (predictions are it will go down, but there's no guarantee), the impact of conflicts in the Middle East and Ukraine on the economy, the U.S. 2024 presidential election and whether inflation stays lower or ramps back up.
Redfin believes that housing costs could play a key role in the presidential election.
Realtor.com offers specific predictions about what will happen to home sales and price growth, both on a year-over-year basis in 2024. Here's a sampling from the West. For the entire nationwide list, visit the link above.
- Salt Lake area home sales will decrease 10.2% and prices drop 4.1%.
- Ogden-Clearfield: Home sales are predicted to decrease 15.1% and prices to drop 3.8%.
- Boise, Idaho: Home sales will drop 3.2% and prices will drop 3.4%.
- Las Vegas, Henderson and Paradise, Nevada: Home sales will grow 11.1%, while prices drop 2.3%.
- Seattle home sales will increase 3.9%, and prices drop 1%.
- Phoenix, Mesa and Scottsdale, Arizona, will see home sales grow 4.4%, and prices increase 4.3%
- Los Angeles will see an increase of 9.2% in home sales and prices will increase 3.5%.
Realtor.com also has a Rent vs. Buy Calculator to help people calculate housing costs.
