Navigating the 2024 Real Estate Landscape: A Shift in Favor of Homebuyers

In the dynamic world of real estate, a recent Zillow monthly report suggests that buyers are finally catching a break, thanks to a decrease in mortgage rates. Homeowners, too, seem to be breaking free from the "rate lock" dilemma, opening up new possibilities in the market. In this blog, we'll delve into the key findings of the report and explore what this means for both buyers and sellers in the current real estate landscape.

Buyer Relief and Changing Trends

The latest Zillow report reveals a silver lining for buyers who have experienced significant savings due to falling mortgage rates. However, the volatility of mortgage rates remains a crucial factor influencing appreciation and affordability, particularly for first-time buyers in 2024.

Skylar Olsen, Zillow's chief economist, highlights the shifting landscape, stating, "Fortunately, rate lock appears to be wearing off for some homeowners, who show encouraging signs that they're ready to come back to the market."

Homeowner Considerations

A recent Zillow survey indicates a positive trend, with 21% of homeowners considering selling their homes within the next three years, up from 15% a year ago. Interestingly, the survey found that the likelihood of selling was almost the same for homeowners with mortgage rates above or below 5%. This shift suggests that current mortgage rates may have become less of a determining factor for homeowners contemplating a sale, compared to six months ago.

Affordability and Changing Dynamics

The Zillow survey also sheds light on changing affordability dynamics. Monthly payments for a new mortgage on a typical home have decreased, making home buying more affordable. However, the national average may not reflect the challenges faced by potential buyers in expensive metros. The decision to buy or rent in 2024 requires careful consideration of personal finances, investment strategies, and market expectations.

Improvements in Inventory

The real estate market is slowly recovering from the pandemic-induced inventory shortage. Annual gains in inventory have been recorded since April, with levels now 36% below pre-pandemic averages, a notable improvement from the 46% deficit seen in May. While the flow of new listings is better than the previous year, it remains 14.5% below pre-pandemic norms. The direction of this trend will unfold as 2024 progresses.

Persistent Competition

Despite improvements in inventory, the limited choices available contribute to ongoing competition in the market. The scarcity of listings with price cuts, coupled with a fast pace of homes going under contract, indicates a continued seller's market. The latest Zillow data reveals that nearly 30% of homes nationwide are selling for more than their original list price, emphasizing the persistence of competition in the real estate landscape.