By Rick Taylor, Charles Reinhart Company

The 2024 economic projections are in, and the outlook for the local real estate market looks promising for both buyers and sellers alike.

2023 was a year of economic transition on a national scale. Faced with unprecedented inflation, the Federal Reserve was forced to take drastic steps to tighten monetary policy. The most direct impact of that policy on the real estate market was an increase in mortgage interest rates, which topped out at nearly 8 percent in October of 2023. The good news is that these policy changes appear to have shifted conditions in a more favorable direction. Late-year economic data has revealed cooling inflation and the Federal Reserve has made early signals towards looser monetary policy in 2024. As a result, mortgage rates finished 2023 well below 7%, with most major forecasters predicting further declines in 2024.

The forecasted decline in mortgage interest rates should provide some needed relief to homebuyers feeling crunched by a lack of affordability. Accordingly, buyer demand is expected to be very strong throughout 2024. Higher mortgage interest rates caused many buyers to pause their home search in 2023. Lower mortgage interest rates should bring those buyers back to the market more motivated than ever to find a dream home.

One challenge that buyers will face is that the number of homes available for sale is expected to be insufficient to meet demand. This limited inventory means that buyers should expect competitive bidding on homes to be the norm. Working with a Realtor® will continue to be the best approach for a buyer to be informed on the state of the market so that a competitive offer can be presented.

Strong demand and limited inventory should dictate that home values will continue to appreciate. On average, homes in Washtenaw County saw an increase in value ranging 5-7% percent in 2023. That is a rate of appreciation that outpaces what the market has historically returned, so my natural inclination is to predict that 2024 will show a more modest appreciation in value. Nevertheless, from my point of view, all of the pieces are there to create sustained upward pressure on home prices throughout 2024.

One counterintuitive point for a seller to consider is that the condition of a home continues to be of paramount importance to homebuyers. With buyers remaining very cognizant of affordability constraints, there is increased sensitivity to the likelihood of necessary repairs. If you are considering selling your home this year, January is a great time to take stock of projects and begin to make plans to complete them. A Realtor® can provide you with expert guidance on what it will take to position your home in the market for a maximum return.

While these are my thoughts on general trends, every situation is different. I’d recommend we meet in person to tour your home or discuss your particular real estate needs. From vacant land to luxury homes, I had the opportunity to help many great clients in 2023. I’d love to be able do the same for you in 2024!

Your real estate expert, Rick Taylor