Monday, January 15, 2024 / by Richard Eimers
In recent years, soaring mortgage rates have chilled the enthusiasm of homebuyers and deterred potential sellers from entering the market due to the prospect of higher loan costs.
This prolonged period of cautious waiting has led to a notable slowdown in the real estate sector. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), estimates a substantial 18% decrease in existing home sales last year, following a 17% decline in 2022.
As financing costs gradually decrease, there's optimism for a resurgence in sales volume. Selma Hepp, Chief Economist at CoreLogic, anticipates a boost in home sales activity in 2024 compared to 2023. The decline in mortgage rates is expected to motivate more sellers to trade their existing homes, alleviating the market's inventory shortage and stimulating increased transactions.
Evidence suggests that homebuyers' patience is waning, even with higher borrowing costs. A recent Bank of America survey indicates a significant drop from 85% to 62% in the number of buyers willing to wait for price or mortgage rate declines over a six-month period.
Matt Vernon, Head of Consumer Lending at Bank of America, advises that, despite the current interest rate environment, there are clear benefits to buying a home and initiating equity building.
What Does It Mean for You?
If you've been delaying a home purchase, consider acting sooner to capitalize on lower rates and potential increased demand.
Sellers should act promptly as well, as a surge in listings may pose challenges in standing out. Seek our guidance for a professional assessment of your home's market value.
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