As we reflect on the year 2024 in the housing market, it's clear that it was a period of both expected trends and unexpected turns. Here, we'll explore the accuracy of the predictions made in early and mid-year 2024, based on our blog posts from Texas Roadrunner Realty, and summarize the year’s overall dynamics.
What We Got Right:
1. Inventory Shortages Persisted:
- As predicted in our initial 2024 outlook, the market continued to suffer from a significant lack of inventory. In both San Antonio and the broader U.S. market, the number of homes for sale remained below what was needed to meet demand. This was largely due to the "lock-in effect" where homeowners with low-rate mortgages were reluctant to sell into a higher-rate environment.
2. Price Stability and Modest Growth:
- We anticipated that home prices would not crash but might experience modest growth. This prediction held true as home prices in many areas, including San Antonio, did not plummet but instead saw a steady, if not spectacular, increase. The median home price in San Antonio, for instance, continued to rise, albeit at a slower pace than in previous years.
3. Interest Rate Fluctuations:
- Our mid-year update correctly noted the volatility in mortgage interest rates. Throughout 2024, rates fluctuated, often in response to Federal Reserve actions and inflation reports. This volatility did affect buyer affordability and market pacing, though not as dramatically as some might have feared.
4. Continued Demand for Suburban and Rural Properties:
- The shift towards suburban and rural living, a trend accelerated by the remote work culture, continued into 2024. This was highlighted in our outlook, noting that areas outside traditional urban centers would see sustained demand due to space and lifestyle preferences.
What We Got Wrong:
1. Mortgage Rate Predictions:
- Early in the year, we speculated that mortgage rates might start to decline, providing some relief to buyers. However, this didn't come to pass as swiftly as anticipated. Instead, rates remained stubbornly high for much of the year, only showing signs of easing towards the end of 2024. This delayed rate reduction impacted buyer activity more than expected.
2. Speed of Market Cooling:
- We underestimated how quickly some overheated markets would cool. In early 2024, we didn't foresee the extent to which markets like Austin and Boise would see price adjustments or the amount of time properties would stay on the market in these areas. This was partly due to a quicker-than-expected recalibration of demand in response to high interest rates and affordability challenges.
3. New Construction Impact:
- While we noted an increase in construction starts, especially in multi-family housing, the impact on alleviating inventory shortages was less significant than anticipated. Builders faced challenges with labor, materials costs, and regulatory hurdles, which slowed the pace at which new units could hit the market.
Summarizing 2024:
Market Overview:
- Home Prices: Despite the challenges, home prices across the U.S. generally increased, though at a moderated pace. The median sale price in the U.S. was about $404,500 by September 2024, illustrating the resilience of home values even amidst high interest rates.
- Sales Volume: Home sales volume was lower than in previous years, reflecting cautious buyer behavior due to higher interest rates and affordability issues. Total home sales for the year were among the lowest since the early 2010s, particularly in markets where price and rate sensitivity was high.
- Interest Rates: The average 30-year fixed mortgage rate hovered around 6.88% by late October, a slight decrease from the peak but still significantly higher than in recent years, affecting purchasing power and market dynamics.
- Regional Variations: The Sun Belt continued to see population growth, bolstering housing demand in states like Texas, Florida, and Tennessee. However, markets in the West, especially those that had soared during the early stages of the remote work boom, saw corrections.
Looking Forward:
- The end of 2024 hinted at a possible stabilization, with some markets showing signs of returning to balance as inventory slowly increased and rate expectations became clearer.
- For 2025, if interest rates continue to stabilize or decrease, we might see a resurgence in buyer activity, though any significant drop in home prices seems unlikely without a broader economic downturn.
2024 was a year where the housing market navigated through a complex environment of high interest rates, persistent low inventory, and shifting buyer preferences. While some predictions were spot-on, others reminded us of the unpredictable nature of real estate markets. Moving forward, adaptability and a keen eye on economic indicators will be crucial for those looking to engage with the housing market.
By analyzing what we got right and wrong this year, we’re better equipped to help clients make informed decisions. Whether you’re planning to buy, sell, or invest in 2025, the lessons of 2024 will serve as a foundation for navigating the ever-evolving real estate landscape.
If you’re ready to take the next step in your real estate journey, contact us at Texas Roadrunner Realty for expert guidance tailored to your needs.
