Hottest Housing Markets Predicted for 2024 – Norada Real Estate Investments

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After a challenging period marked by sharp declines, the housing market is poised for a rebound in 2024. The National Association of REALTORS® (NAR) forecasts significant improvements. According to NAR Chief Economist Lawrence Yun, existing-home sales are set for a pivotal period of recovery in 2024, as discussed at NAR’s virtual Real Estate Forecast Summit.

The good news comes in the form of mortgage rates, which are projected to have peaked and are now on a downward trajectory from their recent high of nearly 8%. NAR predicts the 30-year fixed-rate mortgage to average 6.3% in 2024, while realtor.com® forecasts 6.5%. This shift is expected to enhance housing affordability, enticing more prospective buyers back into the market.


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NAR’s data highlights that rates near 6.6% enable the average American family to afford a median-priced home without exceeding the widely accepted threshold of 30% of their income devoted to housing costs.

Optimism resonates in NAR’s projection, anticipating a 13.5% increase in existing-home sales and a remarkable 19% potential rise in new-home sales by the end of 2024. This positive outlook aligns with the consensus among leading housing analysts that the real estate market is on the path to recovery.

The Hottest Housing Markets to Watch in 2024

Not all markets will experience the same level of recovery, and NAR has identified key metro areas poised for higher sales upticks in 2024. Job growth is identified as a determinant for long-term housing demand, and the following markets are highlighted for their potential:

  • Austin-Round Rock-Georgetown, Texas
  • Dallas-Fort Worth-Arlington, Texas
  • Dayton-Kettering, Ohio
  • Durham-Chapel Hill, N.C.
  • Harrisburg-Carlisle, Pa.
  • Houston-The Woodlands-Sugar Land, Texas
  • Nashville-Davidson–Murfreesboro–Franklin, Tenn.
  • Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.
  • Portland-South Portland, Maine
  • Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.V.

While optimism surrounds the housing market’s prospects for 2024, certain challenges and considerations, particularly related to inflation, could impact the trajectory of the real estate landscape.

Danielle Hale, chief economist at realtor.com®, emphasized the potential impact of inflation on housing market dynamics. While expressing optimism for improvement, she identified inflation as a key factor that could derail positive forecasts. If inflation persists, it may lead to an increase in long-term interest rates, discouraging homeowners from selling and exacerbating inventory bottlenecks.

Hale highlighted the risk that higher housing costs pose to younger generations, potentially keeping them on the sidelines as renters. The outcome of inflation trends, therefore, holds significant ramifications for the broader housing market. Monitoring inflation data becomes crucial in assessing the market’s resilience and potential challenges.

Despite potential improvements in inflation and mortgage rates, the 2024 housing market is expected to present challenges. First-time buyers, especially those unable to leverage proceeds from a previous home sale, may face difficulties. Record low inventory levels continue to be a significant hurdle, with homeowners reluctant to sell and give up favorable mortgage rates secured in previous years.

The persistent underproduction of housing units by homebuilders over decades has led to a nationwide shortage of 5 million units, according to NAR research. This scarcity contributes to the competitive nature of the market and may lead to increased housing costs.

Top Housing Markets for 2024: Revealed by Realtor.com

Realtor.com has also unveiled its highly anticipated ranking of the top housing markets for 2024. Let’s delve into the data and explore the nuances of each metro area, shedding light on existing home sale counts, median sale prices, and their comparisons to the averages of the pre-pandemic years from 2017 to 2019.

1. Toledo, OH: A Strong Start in the Midwest

Toledo, Ohio, emerges as the top-ranking metro in the Midwest, exhibiting a remarkable 14.0% year-over-year growth in existing home sale counts for 2024. Additionally, the existing home sale counts surpass the 2017-2019 average by 5.2%, signaling a robust real estate market in the region. The median sale price shows an impressive 8.3% year-over-year increase, outpacing the average from 2017 to 2019 by a significant 43.4%, underlining the city’s resilience and growth potential.

2. Oxnard-Thousand Oaks-Ventura, CA: Navigating Challenges in the West

The West is represented by Oxnard-Thousand Oaks-Ventura, California, securing the second position. While experiencing an 18.0% year-over-year growth in existing home sale counts, there is a notable deviation from the 2017-2019 average, showing a decline of -35.1%. The median sale price exhibits a modest 3.3% increase year-over-year, with a relatively stable comparison to the pre-pandemic average, up by 43.3%. Despite challenges, the metro demonstrates resilience and an upward trajectory.

3. Rochester, NY: Northeastern Stability

In the Northeast, Rochester, New York, stands out with a 6.2% year-over-year growth in existing home sale counts for 2024. Although this growth is tempered by a -20.6% deviation from the 2017-2019 average, the city maintains stability. The median sale price sees a significant 10.4% year-over-year increase, surpassing the pre-pandemic average by a substantial 66.5%. Rochester showcases a unique balance between growth and stability in the northeastern real estate market.

4. San Diego-Chula Vista-Carlsbad, CA: Navigating Sensitivity in the West

San Diego, California, represents the West, exhibiting an 11.0% year-over-year growth in existing home sale counts for 2024. However, the comparison to the 2017-2019 average reflects a sensitivity, with a decline of -31.7%. The median sale price showcases a 5.4% increase year-over-year, surpassing the pre-pandemic average by 58.2%. The metro navigates challenges with resilience, emphasizing its growth potential amid external factors.

5. Riverside-San Bernardino-Ontario, CA: Sustaining Growth in the West

  • Existing Home Sale Counts: 13.8% year-over-year growth
  • Comparison to 2017-2019 Average: -25.2%
  • Median Sale Price: 2.0% year-over-year increase
  • Comparison to 2017-2019 Average: 53.9%

Riverside, California, showcases a robust real estate market with a 13.8% year-over-year growth in existing home sale counts for 2024. While there is a -25.2% deviation from the 2017-2019 average, indicating sensitivity, the median sale price sees a 2.0% year-over-year increase, surpassing the pre-pandemic average by 53.9%. The metro sustains growth while managing the impact of external factors on its real estate landscape.

6. Bakersfield, CA: Resilience and Moderate Growth

Bakersfield, California, secures its position with a 13.4% year-over-year growth in existing home sale counts for 2024. Despite a -19.8% deviation from the 2017-2019 average, the city demonstrates resilience and moderate growth. The median sale price reflects a 2.3% year-over-year increase, exceeding the pre-pandemic average by 53.3%. Bakersfield’s real estate market showcases a balance between growth and stability.

7. Springfield, MA: Northeastern Affordability

Springfield, Massachusetts, represents the Northeast with a 10.5% year-over-year growth in existing home sale counts for 2024. The city maintains affordability with only a -7.0% deviation from the 2017-2019 average. The median sale price sees a 4.2% year-over-year increase, surpassing the pre-pandemic average by 48.9%. Springfield stands out for its affordability and growth potential in the northeastern real estate landscape.

8. Worcester, MA-CT: Balanced Growth in the Northeast

Worcester, Massachusetts, showcases balanced growth in the Northeast, with a 9.1% year-over-year increase in existing home sale counts for 2024. Despite a -17.2% deviation from the 2017-2019 average, the city maintains stability. The median sale price reflects a 4.8% year-over-year increase, surpassing the pre-pandemic average by 61.8%. Worcester presents a harmonious blend of growth and stability in the northeastern real estate market.

9. Grand Rapids-Kentwood, MI: Midwest Resilience

Grand Rapids, Michigan, represents the Midwest with a 6.1% year-over-year growth in existing home sale counts for 2024. The city demonstrates resilience, with a -20.5% deviation from the 2017-2019 average. The median sale price sees a notable 7.2% year-over-year increase, surpassing the pre-pandemic average by 72.3%. Grand Rapids exemplifies resilience and growth potential in the Midwest real estate landscape.

10. Los Angeles-Long Beach-Anaheim, CA: Westward Trajectory

Los Angeles, California, secures the tenth position in the West, exhibiting a 9.2% year-over-year growth in existing home sale counts for 2024. However, the comparison to the 2017-2019 average reveals a sensitivity, with a decline of -31.9%. The median sale price showcases a

Analysis of the Top Real Estate Markets for 2024

Realtor.com conducted a thorough analysis, ranking the largest 100 metros based on their expected sale and price growth rates. The outcome reveals the top 10 housing markets for 2024, all situated in the Midwest, Northeast, or Southern California. While a common criterion was employed to identify these markets, the report highlights that two distinct trends are driving the top-performing areas.

The report underscores two driving factors behind the top housing markets for 2024. In Midwestern and Northeastern metropolitan areas, the primary force is “affordability in what has become a very expensive national housing market.” Meanwhile, Western metros are expected to bounce back due to the areas that “took a big hit in 2023 and are anticipated to rebound as interest rates fall over the year.”

While the top housing markets for 2024, particularly in Southern California, showcase promising sales growth, affordability remains a significant concern. Realtor.com’s insights provide a nuanced perspective, highlighting the anticipated 13.1% average sales growth in Southern California metros—Oxnard, San Diego, Riverside, Bakersfield, and Los Angeles. However, understanding the context is crucial to grasp the full picture.

Despite the projected improvement from 2023 figures, the top Southern California metros are expected to maintain historically low sales levels. The report emphasizes that these markets are anticipated to trail national figures, totaling approximately 25% below 2017-2019 norms. Moreover, sales in these Californian metros are projected to be 20% to 35% lower than the typical pre-pandemic years from 2017 to 2019.

Unlike their counterparts in the Midwest and Northeast, Southern California markets are more sensitive to the impact of elevated mortgage rates and rising interest rates. This heightened sensitivity necessitates a closer examination of the factors influencing these markets, considering both the opportunities and challenges they present.

Realtor.com’s report sheds light on potential solutions to the affordability challenges in Southern California markets. While these areas are more sensitive to mortgage rate fluctuations, government-backed mortgage products could play a crucial role in assisting homebuyers. Notably, FHA loans, designed to support first-time or minority homebuyers, played a substantial role in the period from January to August 2023.

The report highlights that FHA loans accounted for 15.8% of all mortgaged sales in the top Southern California markets during this period. Bakersfield, Calif., stood out with the highest share of FHA purchases at 26.7%, followed by Riverside, Calif., at 22.9%. In the broader context, the prevalence of FHA loans among mortgaged purchases averaged 15.0% in the largest 100 markets.

During the same period, San Diego emerged as a leader in utilizing VA loans, with a 16.5% share, nearly double the largest 100 market average of 9.1%. These trends underscore the role of government-backed mortgage products in facilitating home purchases, providing potential homebuyers with avenues to secure homes in challenging market conditions.


Sources

  • https://www.nar.realtor/magazine/real-estate-news/economists-turnaround-in-home-sales-likely-in-2024
  • https://www.realtor.com/research/top-housing-markets-2024/
  • https://www.realtor.com/research/2024-national-housing-forecast/

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