If your goal last year was to buy a home, and it didn’t happen, we’re here for you. The 2023 buying season was a rollercoaster of ups and downs for many would-be homeowners. There was a bit of everything to make buying a house difficult. Mortgage interest rates rose to 7.79% in October, while the average median home price was above $400,000. Those conditions made buying a house, especially for first-time home buyers, very challenging.
So, what will make 2024 any different? There are a few positive signs that may help you feel better about your chances of becoming a homeowner this year.
- If you already own a home, you’re in a good position. One of the advantages people who already own a home have is that most are locked into a lower mortgage rate. According to a December report from Realtors.com, two-thirds of all current mortgages have an interest rate of 4% or lower. This is a big advantage if you are considering a new home because you don’t have to rush. If you have a good rate and can stay in your current property, you can wait until you find the right property at the right price before moving.
- You may have a better credit score. While buyers have been waiting for more favorable conditions in the housing market, they’ve been working to improve their credit FICO® scores. So, new mortgage owners are becoming homeowners with stronger credit, which is good for the long-term viability of their mortgage and the real estate market. According to data from the Federal Reserve, the median credit score for new mortgage owners in the latter half of 2023 was 770. *FICO® is a registered trademark of Fair Isaac Corporation.
- Interest rates are slowly falling. While high interest rates have kept many would-be homeowners from joining the market, rates are coming down slowly. This is actually a good thing because if rates dropped too quickly, it would overwhelm the market as potential buyers race to buy at a lower rate. The slower progression of falling rates may help avoid a large influx of new buyers, which could be an advantage if you can afford a home at the current rates and housing prices.
- Builders are more optimistic about the future. One of the reasons the market has been so difficult to break into for buyers is the historically low inventory of homes. However, high interest rates also hampered home building construction. But the sentiment is changing among builders. According to the “recent National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder sentiment rose from 34 to 37 in December. A reading of 50 or above means more builders see good conditions ahead for new construction.” This could mean that we will see an uptick in home construction this year, opening up the market for potential buyers.
- Foreclosure activity is down. One of the signs of an impending housing market crash is a rapid rise in foreclosure activity. But experts say that it is not happening right now. Foreclosures are at 60% of pre-pandemic levels because homeowners have built up a strong supply of home equity. According to Forbes, about 80% of homeowners have at least 20% or more equity in their homes. This is good news for the real estate market as it shows continued stability.
We know that buying a home is challenging right now. Housing prices are still high, and inventory is still low. Rates have dropped, but maybe not as much as potential homeowners hoped. But you can be optimistic about buying a home this year. The right financing, a good real estate agent, and a strategic plan can help you achieve your real estate goals this year. We want to help you get there.
