When Will Housing Prices Drop? Experts' Predictions for 2024
As the housing market continues to evolve, many prospective homebuyers are wondering when they can expect to see more affordable home prices. The good news is that experts are predicting a more balanced market in the coming years, with home prices expected to stabilize and potentially even decline slightly in 2024.
According to Fannie Mae's latest housing forecast, home prices are projected to rise by 3.9% in 2023 before declining by around 0.7% in 2024. This suggests that while the market may remain tight in the short term, there could be some relief for buyers on the horizon.
One of the key factors driving this prediction is the expected moderation in mortgage rates. As the Federal Reserve continues to hike interest rates to combat inflation, the cost of borrowing has risen significantly, making it more challenging for first-time and low-income buyers to enter the market. However, experts believe that as the Fed's actions take effect, mortgage rates may start to stabilize, easing the financial burden on prospective homeowners.
Another factor contributing to the potential for more affordable housing is the ongoing supply-demand imbalance. While inventory levels have been historically low, new construction and a slowdown in buyer demand due to higher rates could help alleviate the shortage. This, combined with demographic trends that are creating a new wave of buyers, suggests that home prices are unlikely to experience a significant nationwide decline.
Market Variations
That said, not all markets will see the same trajectory. Certain once-hot housing markets may experience small price drops as the market cools, while others may continue to see modest price appreciation. Ultimately, the path to more affordable housing will vary depending on the local market conditions and economic factors at play.
No Housing Crash Expected
Despite the mixed outlook, the consensus from housing experts is that the housing market is not expected to crash, even in the face of rising mortgage rates and fears of a recession. Any market correction is expected to be modest, with the fundamental supply-demand imbalance preventing a repeat of the Great Recession.
For prospective homebuyers, the key takeaway is that while the path to affordability may not be immediate, there are signs that the housing market is headed in a more balanced direction. By staying informed and working closely with real estate professionals, buyers can navigate the market and find the right opportunities to achieve their homeownership dreams .
