It’s time for our annual Real Estate Market predictions. The last 12 months of the real estate market in Dallas have looked different than we expected. But we know many of you are wondering what’s to come. Will rates ever come back down? When will be a good time to buy or sell a home? So, today we are going to answer those questions and share our outlook and predictions for the Dallas real estate market in 2024.
2023 Market Recap
Last year, everyone was wondering if the market was going to collapse. Thankfully, it didn’t! People continued to move to Texas in huge numbers and the Dallas Fort Worth Metroplex remained one of the top markets in the country for those buying real estate. The demand for more housing far outweighed the supply, therefore, we didn’t see a cratering of home prices that sellers were dreading and buyers were looking for.
What was unexpected about 2023 were the mortgage rates that did not fall as we hoped. Instead, our lowest rates in 2023 occurred in February hitting around an average of 6.25% for a 30-year mortgage. From there, we saw a summer run up the rates that eventually topped out around 8% in October. While rates have improved slightly since they were not the five to 6 percent we were hoping for by the end of 2023.
Because rates remained high, we saw that many homeowners chose to hold onto their low interest rates because they didn’t want to have to buy in a high-interest environment. This resulted in lower inventory for buyers.
Overall, the market looked much more balanced. Home prices still appreciated, but at a lower rate than we’ve seen in the wake of some recent white hot years. Buyers even had the opportunity to negotiate and get concessions this year and sellers were more realistic. Therefore, we saw much more evenness amongst buyers and sellers.
2024 Predictions
What will rates be like in 2024?
We desperately hope we aren’t sitting here in a year looking at the same rates, but if there’s anything we’ve learned, it’s that the days of a three or four-percent mortgage aren’t due to hit us again anytime soon. However, if rates drop below six percent, we expect a flood of activity in the marketplace. We predict that rates will be at six percent by the spring and we hope that we see 5.5% by the end of next year.
Demographic Influences on the Market
For millennials, the median age for homebuyers is now 35 years old. And we have the largest generation ever now hitting this age. Therefore we have an incredible amount of buyers hitting the market, which is contributing to the pent-up demand we’ve been seeing.
The boomer generation is beginning to downsize, which will help increase the amount of inventory that is available as this generation moves out of their homes and makes room for millennials to move in. As they age and retire, the largest generational transfer of wealth ever will occur within the next 10 years. Meaning, that the huge amount of wealth that boomers have accumulated will be passed down to the next generation.
As a result of both of these unique demographic influences, 2025 is predicted to be the second or third-largest home sales year in American history. We believe we will see the dam breaking on the real estate market because of lower rates and these demographic factors hitting at the same time. Supply will increase, but not enough to meet demand, and therefore we still expect to see home prices appreciate.
What does this mean for me as a buyer?
Right now, there is less competition for homes. If you can find the right home for you, now is the best time to buy. If rates drop below six percent, we will see an influx in buyers finally getting out to buy, which will mean increased competition and higher home prices.
If you’re having trouble finding the right home for you, we hope that a lowering of rates will also mean that sellers who are ready to move will go ahead and do so. Which will lend itself to more inventory available on the market. We recommend getting your ducks in a row now, get pre-approved, and be ready.
What if the rates drop significantly after you buy? If this happens, your lender can run some quick numbers and discuss the option for refinancing. And if rates don’t decrease, enjoy building equity and watching your home appreciate!
What does this mean for me as a seller?
We predict that demand for homes should increase in the spring, which will be a great time to sell. Talk with your agent about the target market for your home and what the demand might be. Millennials are looking for places that are updated and move-in ready in prime locations. If your home isn’t one of those, your realtor should be able to help you set expectations and market your home effectively, and figure out the right timing for your home.
What if I need to buy and sell?
This will depend upon your unique situation. Will your purchase be contingent on your home sale? Can you move into your new home before selling your old one? We discuss these options in more detail in our blog “2nd Time Homebuyers - How to Buy and Sell Simultaneously”. Whatever your unique situation is, we are here to help you navigate it in today's market.
Lastly, we are predicting that 2024 will be a great year in Dallas real estate. Our market remains strong, and it is a privilege to be able to help you buy and sell your homes. No matter what the market does, we will be here to help you with your real estate needs! If you’d like to talk through how these market predictions apply to your situation, give us a call.
Until next time,
Brianna & Keelie