The housing market is proving to be a mixed bag as we close out 2024. While there is an influx of properties available for sale, many of these listings are languishing unsold. This surge in inventory presents not just opportunities but also challenges for buyers, sellers, and real estate professionals alike.
As reported by Redfin, active listings in November 2024 reflected a notable 12.1% increase compared to November 2023. This figure marks the highest inventory level since 2020. However, a closer examination reveals that the quality of this supply is questionable. A staggering 54.5% of properties had been on the market for over 60 days—an indication that the homes either lack appeal or are mispriced. This percentage stands as the highest for any November since 2019, nearly a 50% rise from the same period last year. Additionally, homes that did close fell under contract after an average of 43 days—a pace that has not been witnessed since 2019.
The real estate agent Meme Loggins emphasizes the challenges faced by sellers in this fluctuating market. Properties that are well-priced and in good condition tend to attract buyers quickly, often closing within days. Conversely, homes that are overpriced linger on the market for months, illustrating the critical importance of appropriate pricing strategies in today’s landscape.
Mortgage rates have been a significant factor influencing the housing market throughout 2024. October saw rates surpass 7%, and they have remained at elevated levels through the year’s end. This sustained high interest rate environment has compounded the stress of home affordability. The latest S&P CoreLogic Case-Shiller report indicated a national home price increase of 3.6% in October compared to the same month last year. The continuous rise in prices, amidst high mortgage rates, leaves buyers grappling with affordability challenges.
Brian Luke from S&P Dow Jones Indices suggests that the recent positive trends in the national index could be interpreted as homeowners gaining confidence post-election uncertainties. Yet, with interest rates firmly above 6% for the past two years, buyers have learned to adjust their expectations about financing, accepting the new normal rather than holding out for potential decreases.
Pending home sales, an important barometer of market activity, experienced a rise in November, reflecting a volatile yet hopeful market. According to the National Association of Realtors (NAR), the recent uptick in signed purchase contracts points to buyers adapting to the fresh inventory. NAR’s chief economist, Lawrence Yun, noted that the shift in buyer behavior signals a recalibrated approach to mortgage rates. With elevated prices and interest rates becoming a fixture of the market, buyers are increasingly positioning themselves to negotiate.
However, though there is demand, it’s essential to recognize that a growing number of renters are choosing to extend their renting periods. The combination of increasing home prices and rising moving and broker fees has deterred many from making the leap into homeownership.
Looking ahead to 2025, the housing market faces several hurdles. Although increased inventory might suggest a more favorable market for buyers, the realities of persistently high mortgage rates may stifle overall sales growth. The “seller lock-in effect,” wherein homeowners hesitate to trade in their low-interest mortgages for new ones, started to ease but primarily remained tied to life changes necessitating a move. Economic conditions have placed more pressure on buyers who find it increasingly challenging to keep up with inflated housing prices.
As inflation adjustments reflect, the expense associated with homeownership stands at the highest levels seen in decades. This reality highlights the need for strategic thinking among prospective buyers and sellers.
The housing market at the end of 2024 is characterized by a complex interplay of increased supply and unmet demand, primarily driven by high mortgage rates and inflated prices. While the overall outlook remains cautious, adaptability on the part of buyers, sellers, and real estate agents will be crucial as we venture into 2025. Understanding market dynamics and pricing strategies will dictate success in this very fluid environment, requiring vigilance and responsiveness from all parties involved.
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