What to Expect From the Economy and Housing Market in 2024
by Andrea Savage | Chief Marketing Officer
Realogics Sotheby's International Realty
Request a copy of the
2023 Forcast Report, today.
Request a copy of the
2024 Forecast Report, today.
Request a copy of the
2023 Forcast Report, today.
Inflection
Point
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"I suspect that pent-up demand is on the cusp of springing back and replacing the sales volumes that were lost in 2023, leading to year- over-year transactional growth in the range of 15% to 20%."
by Diane Hayes | Senior Residential Appraiser
Hosted by RSIR President and CEO Dean Jones, our new podcast series Market Perspectives will feature a variety of savvy guests who will weigh in on the trends and news that shape both local and global markets.
WELCOME TO THE
A COMPREHENSIVE LOOK AT THE PACIFIC NORTHWEST'S EVER-CHANGING RESIDENTIAL REAL ESTATE LANDSCAPE
by Matthew Gardner | Real Estate Economist
The most recent market cycle was driven by the historically low mortgage rates. Their effects still dominate how the market is behaving today. Prices were driven to the current high level by low rates that have since gone up significantly. Existing owners are happy with high values and cheap debt. Potential buyers are not too sure today’s prices and today’s mortgage rates are a good deal. Given current house prices and mortgage rates, potential buyers can rent at a substantially lower monthly cost without a substantial downpayment and being locked in place with a mortgage. Current owners are very reluctant to move away from their low mortgage rates. This is often called the “rate trap effect.” Any move by a seller to a new home with debt involves a stiff headwind of higher interest. This is the inverse of the motivation a few years ago when sellers could trade up in housing and down in mortgage rates. Now a move with the same level of debt is an automatic increase in payments. This is a substantial hurdle for sellers and causes the market to remain in a low-volume environment. In this low-volume environment, a greater portion of the transactions are driven by “have-to sales” rather than the less necessary “want-to” ones. The more highly motivated sales, or the “have-to sales,” are often the result of household formation and major life events, such as marriage, children, divorce, death, job relocation, and major changes in income. Life’s circumstances and economic conditions can bring buyers into the housing market and also price them out of it.
by Vince Healy | Senior Residential Appraiser
Unveiling the Past, Present, and Future of Puget Sound's Real Estate Market
The US economy appears set to avoid any significant decline in activity and, if history is any forecaster of the future, we are at the start of a multiyear period of growth as the business cycle starts to rotate again. With economic growth will come rising incomes and cheaper borrowing costs, which is particularly important for the housing market.
The pandemic led to a frenetic period for the ownership market, and nobody knew with any certainty how it would turn out. But, as we look in the rear-view mirror today, it becomes very clear that anyone expecting a collapse in the housing market akin to that seen during the “housing bubble” will still be waiting!
Housing has proved itself to be a remarkably stable asset and one that I firmly believe will continue to grow in value as well as being a home for us and our families.
As with all major investments, consumers are wise to consult an industry expert to review the trendlines and not just the headlines. The experienced agents at Realogics Sotheby’s International Realty have demonstrated their mastery of these market dynamics by delivering benchmark results in 2023, according to Trendgraphix research, and they remain well-qualified on how to position a property to sell or posture a buyer to purchase with optimal results. One thing that has proven to be true at every market inflection point is by the time the news media picks up on the trend, the market bottom has already passed.
Realogics Sotheby’s International Realty is pleased to present our 2024 Forecast Report. In this report, you’ll find a compilation of established Pacific Northwest thought leaders who have analyzed the trends that defined the market in 2023 and offer their expert predictions on what we can expect in the upcoming year.
As 2024 progresses, we see continual improvements, with mortgage interest rates finally decreasing after record spikes of recent years peaked at more than eight percent and locked in consumers, causing the lowest residential sales volumes since the depths of the Great Recession. However, during this cycle, we find median home prices on the rise. At the same time, supply remains tight, and developers take a back seat to higher borrowing costs, inflation with construction budgets, and protracted deliveries pushed some potential buyers to rent instead of buy.
Meanwhile, it’s clear that work-from-home and hybrid work continue to change how and where we live, further challenging the in-city commercial real estate market and tepid recovery of urban ecosystems. Yet job growth and an expanding population base keep the Seattle/Bellevue metro area in high demand, with the City of Seattle commanding the top rank as the fastest-growing large city in the US, according to recent Census data. Demand for exurban locales, either as primary or secondary homes, also ticked up as improved accessibility was reached through transportation initiatives and by meeting more attractively priced offerings where consumers could commute from daily.
For our part, the Global Real Estate Advisors of Realogics Sotheby’s International Realty (RSIR) delivered benchmark results for 2023. RSIR continues to lead the luxury market, garnering the highest average sales prices on both sides of the transaction, the lowest days on the market, and the most expansive sales volumes per agent when compared to the top ten largest brands in the Northwest Multiple Listing Services. These statistics don’t just speak for themselves; they demonstrate the trust placed in our agents’ hands.
"My suggestion for buyers who are waiting on the sidelines is that if they can afford a home with the current interest rates and find one that suits their needs, they should purchase now while activity is slower and then refinance the loan when rates drop over the next couple of years."
- Diane Hayes
Analyzing Trends and Predictions in Puget Sound
In the past three years, we have witnessed a changing real estate market, from double-digit appreciation to rising interest rates to levels we haven’t seen in two decades, inflation on consumer goods, and a declining stock market, all while still having a shortage of inventory. As we look forward, reflecting on the trends and dynamics that have shaped the market becomes important to understand its current pulse.
In 2023, there was continued low inventory and fewer sales compared to 2022. The number of residential and condominium sales was at its lowest level in five years. Mortgage interest rates were higher than we have seen in two decades with housing affordability remaining a concern for homebuyers. Some would-be sellers, who purchased or refinanced their homes at rates below 3.5% in 2020 or 2021, opted to put their moving plans on hold rather than pay a higher rate and a higher monthly payment, which has contributed to the continued low inventory.
THE EVER-EVOLVING REAL ESTATE MARKET