Buying a Home in 2024

Are you considering buying a home this year? With a solid game plan and approach to buying a home, you can plan to win in 2024.

Of course you’ll need to prepare. And hey, you’re off to a great start by reading this blog—we don’t want you to fall short of your goals either. But, like with just about anything, being prepared will have you ahead of the competition—and, if rates fall significantly, there will surely be competition.

A persistent shortage of homes for sale will still likely cause challenges for buyers into 2024, leaving sellers in a favorable position. However, with interest rates falling, of late, could it be the year that buyers finally have the advantage? 

If you're considering house hunting this spring, make sure to allocate enough time to find the right property and bring your best negotiation skills to the table. Until then, here’s a breakdown of what's happening in today’s market and how you can prepare.

Home Prices Have Stabilized. Will They Begin to Climb?

The real estate landscape is currently characterized by stable home prices. After a three-year-long surge, prices have mostly held steady this past year, with some regions experiencing slight decreases and others seeing modest increases. As of November 9th, the national median price for existing homes was $430,300, according to the National Association of Realtors (NAR). Looking ahead, NAR predicts a 0.9% increase in the median price for existing homes in 2024 compared to the previous year. Fannie Mae was among the most optimistic predicting a 2.4% increase, while realtor.com® predicts a 1.7% decrease in median home value in 2024.

Here in Colorado, the median home value was significantly higher than the national average at over $612,000. That means you’ll really need to save for your down payment. 

The NAR recently reported a discrepancy in cash (down payment) availability between first-time and repeat buyers. First-time buyers typically make a median down payment of 8%, while repeat buyers put down a higher median of 19%.

Interest Rates Remain Relatively High 

In 2024, it’s high time to acknowledge that historically low mortgage rates are a thing of the past, with rates rising to a 30-year peak in October 2023. However, beginning in November rates began a six-week decline, then stabilized at the end of the year. Currently, rates are holding well below 7% and some experts think we could see rates decrease into the high 5s at some point this year, perhaps as early as Q2. 

NAR predicts the 30-year fixed-rate mortgage to average 6.3% in 2024; realtor.com® projects 6.5%. This likely will improve housing affordability and entice more home buyers to return to the market, according to NAR’s Chief Economist Lawrence Yun. 

The Federal Reserve's efforts to curb inflation have contributed to this trend, with 3 interest rate decreases planned for 2024, if patterns hold (always a big if). While rates may impact initial mortgage costs, it's worth considering the option to refinance if rates decrease in the future.

What Can You Afford?

NAR’s data shows that rates near 6.6% enable the average American family to afford a median-priced home without devoting more than 30% of their income to housing, the threshold commonly used to measure affordability.

We can recommend our trusted lender partners so you can quickly and accurately determine what’s truly affordable for your unique scenario. 

Competing for That Primo House

According to October 2023 data from NAR, over 25% of homes are still selling above their listed price, with 28% of homes achieving this in that month. The median time homes spent on the market was 23 days, and on average, each property received 2.5 offers, indicating a persistently competitive market.

NAR’s Yun emphasized the significant impact of limited housing inventory on satisfying housing demand, stating, "Multiple offers, of course, yield only one winner, with the rest left to continue their search."

On the other hand, cash transactions continue to play a notable role in the marketplace, with nearly one in three sales (29%) completed in cash, up slightly from the 26% reported in 2022.

So, if you have cash, you’re in a better position than most of the market. However, financing is only one aspect of competing for a home and there are many other ways to stand out. 

MORE >>> Offer Strategies that Win

Flexibility and Compromise

As a homebuyer, there are aspects of the real estate market you simply can’t control. For instance, you can't control inventory or when someone decides to put their house up for sale. What you do have control over is your own outlook and readiness.

Consider that finding the absolute perfect home should remain your BHAG (big, hairy, audacious goal) but that a "good enough for now" home can kickstart your homeownership journey sooner and may keep you from having the market pass you by. This rings particularly true for first-time buyers eager to start building equity.

It’s no secret that real estate presents opportunity as a very solid investment long term, and often in the short term. Putting off buying six months or a year might mean losing out on tens of thousands of dollars.

That said, if you find yourself constrained by your options consider broadening the scope of your search to include smaller homes, additional areas, or even different types of housing options such as condos or townhouses, as a suitable compromise. Perhaps you can make do with fewer bedrooms or bathrooms or adapt to a slightly outdated interior. 

And, while I’m not your dad, my best fatherly advice is: keep your spirits up—even if it means tolerating less square footage or putting up with quirky linoleum floors for a bit, you'll end up with equity to remodel or sell down the line.

How to Prepare: Tips for Winning in 2024

No matter which direction rates go, it’s always great to be prepared for opportunity. If you’re one who likes to prepare (and we highly recommend you do) here are some tips to prepare for and compete in the housing market in 2024 (adapted from a recent article from NerdWallet):

1. Get your finances in order: Review your budget, down payment capabilities, and credit score. Consider consulting with a loan officer for guidance on improving your financial profile.
2. Understand mortgage options: Explore various mortgage options beyond the misconception of needing a 20% down payment. FHA and VA mortgages, as well as down payment assistance programs, offer alternatives.
3. Shop mortgage lenders: Compare offerings from different lenders, considering not only interest rates but also the annual percentage rate (APR) and overall loan costs.
4. Hire a good real estate agent: Choose a buyer's agent with market expertise who can guide you through the process, provide referrals, and navigate current market conditions.
5. Make your best offer and negotiate wisely: Beyond monetary considerations, be flexible with terms such as the closing date. Negotiate wisely and only make concessions that align with your financial capacity.
6. Don't give up: Persistence can pay off in a competitive market. Stay optimistic, be prepared to act swiftly, and seize opportunities when they arise.

Bottom Line

Don’t get down about the sky-high costs and the scarcity of options, especially if you're a first-time buyer who's been holding off on the house hunt. With today’s market conditions you may experience challenges. 

Our advice? Consider the long game. Waiting around for lower rates might end up with you facing even higher prices and tougher competition. So, if your heart is set on buying, focus on finding a place that checks as many of your boxes as possible within your current budget, all the while remembering that buying real estate often means compromising. I always remind my homebuyer clients, “even the buyers at $2.3M may have to compromise on that infinity edge pool if they can only afford to get an in-ground pool when everything else is perfect.” Setting your sights on perfection can often lead to unnecessary disappointment.

Homebuyers often expect that they’ll hit a home run with their very first first at-bat when making a purchase. Sometimes, I gently remind them that nothing conquers inflation like real estate, so being in the game is important, even if you start by just getting on base.

In any case, staying informed and adapting your approach will be key to success in this ever-evolving real estate landscape…

…and we’re here to help. You just have to ask.