The final month of 2024 has delivered both challenges and opportunities within the national real estate market. With the Federal Reserve’s recent decision on December 18 to lower its benchmark rate again, many anticipated a corresponding decline in interest rates. However, this move has not met investor expectations. The modest scale of reductions, coupled with the Fed's forecasts, has unsettled bond markets, leading to an unexpected increase in interest rates.
While weekly average interest rate charts capture some trends, they understate the immediate impact of the Fed's latest announcement. Predicting interest rate trajectories has proven increasingly complex, with numerous volatile factors disrupting forecasts over the past three years. Yet, optimism persists: there is hope for a substantial decline in rates in 2025, which could rejuvenate buyer and seller activity.
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Trends in Home Sales and Prices
Median Home Sales Prices
Since 2019, the housing market has displayed consistent seasonal ebbs and flows, with annual price peaks typically occurring in June. These reflect the heightened supply and demand dynamics of late spring. Notably, despite economic uncertainties, median home prices continue to rise year over year. This trend underscores the resilience of the housing market, particularly for single-family homes, which dominate national sales.
Condominiums and co-ops, while a smaller share of the market, are concentrated in pricier urban areas. These properties have also experienced year-over-year price growth, further emphasizing the upward trajectory of property values across segments.
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Sales by Price Segment
Affordability remains a defining factor in today’s housing market. While luxury markets thrive in select areas, the broader national market sees affordability concerns driving significant social, demographic, and market shifts. For many, finding homes within budget constraints has become increasingly challenging.
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Seasonal Market Patterns
As the year draws to a close, the housing market slows, reflecting the broader end-of-year downshift in activity. However, certain second-home and "snowbird" markets buck this trend, maintaining robust activity during the colder months. In general, listing and sales volumes drop sharply in December, with the lowest sales volumes typically recorded in January and February.
Interestingly, the start of a new year often sparks renewed motivation for major life decisions, including relocations. By mid-winter, older listings comprise a larger share of sales, presenting buyers with unique opportunities to negotiate. Reduced competition during this period means buyers may find fewer bidding wars, allowing for advantageous deals.
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Winter Market Dynamics
- Median Days on Market: The mid-winter period sees this metric peak, as older listings linger on the market longer.
- Buyer Opportunities: With decreased demand, buyers face less competition, making winter an ideal time to negotiate.
- Offer Activity: The average number of offers per property typically hits its annual low, reflecting reduced buyer activity but opening doors for strategic purchases.
Photo Courtesy of Compass
Photo Courtesy of Compass
Insights from the U.S. Census
Recent U.S. Census data highlights key housing trends:
- Relocation Patterns: Insights into why, where, and who moved in 2023 paint a picture of shifting demographics and motivations.
- Home Improvements: Roofing, kitchen and bathroom remodels, and HVAC updates topped the list of the most common and costly home improvements. Interestingly, 25% of homeowners focused on energy efficiency upgrades, reflecting growing awareness of sustainable living.
- Homeownership and Tenancy: Newly published data sheds light on the latest ownership rates, tenancy trends, and associated costs.
Photo Courtesy of Compass
Photo Courtesy of Compass
Looking Ahead
The close of 2024 marks a pivotal moment in the real estate landscape. While current challenges persist, there is optimism for 2025. Declining interest rates could reinvigorate the market, bringing buyers and sellers back into the fold. For now, as the market quiets in December, opportunities abound for strategic buyers willing to act while competition is low. The Blackshaw Messel Group is here to help both buyers and sellers continue to navigate these changes with confidence! Contact us today to get started!
