In mid-2024, more than 100 RSIR brokers participated in a survey to voice their opinions on market trending and sales projections for the second half of the year. Below are their resulting statistics and comparison to the actual market results.
How would you describe the current local housing market conditions?
RSIR brokers described a short-term market correction beginning to ease with buyer and seller activity increasing. The primary headwind has been “higher-for-longer” mortgage interest rates, but as median home prices continued to rise, the perceived impediment of steeper finance costs was overcome by equity gains afforded to homeowners. To be sure, the US housing market experienced a 22% decrease in home sales in 2023 from the prior year (the lowest levels since 1995), and the trend had been for increased sales in 2024 on account of sharper Fed cuts to the Bank Rate, but all were deferred to the September, November, and December meetings and not prior. Currently, the industry expects to close 4.6 million homes in 2024, about a 12% increase over the prior year and mostly weighted in the second half of the year.
The following chart depicts the trends for the region of King, Pierce, Snohomish, and Kitsap County collectively illustrating higher inventory and increased pending and sold homes during the second half of the year of 2024.
When do you feel the local housing market will bottom out and recover sales volume and value?
RSIR brokers were broadly correct in their predictions with most believing the housing market has either already reached its inflection point by mid-2024 or will do so during the second half of the year. It’s also fair to say that the market would capitulate given the outcome of Fed moves and political elections were not known until Bank rate cuts commenced during Fed meetings in September and the US General Election wasn’t until November 5, 2024.
Data garnered from S&P/Case-Shiller Home Price Index illustrated that median home prices in the US have been steadily rising in 2024 but tabled during the second half of the year as increased inventory made its way to the market.
What do you believe the Fed will do in the second half of 2024 to respond to US inflation trends?
Once again, RSIR brokers predicted future Fed cuts to the Bank Rate, which occurred during the September, November, and December meetings with 0.50%, 0.25%, and 0.25% reductions, respectively. Nearly half of the respondents also noted that the Fed actions would be variable and sustained “higher for longer,” which seems to be the mantra heading into 2025.
What do you believe the typical 30-year mortgage rate will be by the year end 2024?
RSIR brokers were more optimistic about mortgage rates to close out 2024, as were most market pundits. The Fed’s Summary of Economic Projections recently lowered its expectations for interest rate cuts in 2025 from four to two. This change in outlook sent a signal that benchmark rates will stay higher for longer, which caused mortgage rates to rise. Mortgage rates reflect higher yields in the bond market. The 30-year fixed rate on a home loan more closely tracks the yield on 10-year Treasury bonds. As rates on 10-year Treasury bonds have risen since mid-2020, mortgage rates have risen as well.
The following table from RSIR’s preferred lender, Movement Mortgage, illustrates the trends for both the 15-year and 30-year average rates for conventional mortgages.
How would you describe the state of the US stock market and the effects on personal portfolios?
The initial read amongst RSIR brokers was that the stock markets would be variable and that investor sentiment about the US economy is largely priced into the indices as a prediction of what will happen ahead. At the time of the survey, the US Presidential election campaigns were still very balanced in the polls between Trump and Biden, but soon after in July 2024, President Biden stepped down from leading the Democratic Party, and instead, Vice President Harris stepped in. As it turned out, the year 2024 was a very buoyant stock market as illustrated by the Dow Jones, Nasdaq, and S&P 500 indexes. After a Trump surge in the markets, some investors are selling off his policies on international tariffs, immigration reform, and rising inflation could trigger higher interest rates to cool the economy. Market pundits doubt the 25% increase in the S&P 500 in 2024 will be sustained in 2025 but ranges still point to a 7-14% rise next year.
How do you feel the upcoming US Presidential elections will affect the housing market?
RSIR brokers were evenly split between being consumers being distracted but persevering and those practicing “wait and see.” Most acknowledged that a sitting US President has some impact over economic policies, but ultimately, the House and Senate must commit bills into laws, and the Federal Reserve is an independent government body, so there are no direct connections to influence the Bank Rate (or mortgage interest rates). During a prior RSIR Market Maker Event, local economist Matthew Gardner accurately predicted that Former President Trump would likely win the election given Wall Street rallies and mounting headwinds within the Democratic Party.
How would you describe your professional approach to the projected housing market conditions?
Not surprisingly, RSIR brokers are aggressively pursuing increased market share and sales volumes as the market reboots with amplified excitement for 2025 becoming a banner year ahead. Only a small percentage were more conservative, adopting a “wait and see” attitude on account of (then) uncertainty with the approaching Fed meetings and US Presidential elections. Overall, RSIR closed approximately $2.1 billion in home sales in 2024 with a greater weighting during the second half of year. This posted an 8.5% increase in sales volumes compared with 2023. This matches the overall market trends in unit volumes, albeit the market was helped by increased home prices as well. Most notably, there are approximately 30% more homes available by the close of 2024 compared with the prior yearend in 2023, which sets us up for a more robust 2025. Locally, sales volumes are predicted to expand by 10-15% next year given sustained median home price increases and a greater volume of would-be buyers stepping into the market to avoid the one-two punch of higher prices and increased buyer competition, and then potentially, higher mortgage rates. Savvy consumers understand that a mortgage can always be refinanced but the strike price of a home is constant.
