The verdict is in — the old way of doing business is over. Join us at Inman Connect New York Jan. 23-25, when together we’ll conquer today’s market challenges and prepare for tomorrow’s opportunities. Defy the market and bet big on your future.
The Seattle-based brokerage and real estate portal on Tuesday released its annual housing market predictions for the new year, projecting a shift toward a buyers’ market that already began in late 2023, thanks in part to a continued decline in inflation, falling mortgage rates and additional inventory hitting the market, according to a forecast released Tuesday.
“We expect these trends to continue in the new year, ushering in a season of hope for aspiring homebuyers,” Redfin Chief Economist Daryl Fairweather wrote in the forecast.
A 1% drop in home prices
Redfin predicted home prices will fall a full percentage point throughout 2024 as supply outpaces demand. The brokerage cited a recent double-digit increase in the number of homeowners contacting Redfin to sell their home alongside a small drop in requests from prospective buyers as evidence.
Overall, Redfin predicted 4.3 million homes sold in 2024, a 5 percent annual increase from 2023. It also predicted sales would gain momentum through 2024, instead of lose momentum as they did in 2023.
Rates will decline but stay high
Redfin predicted the average 30-year mortgage rate will sit in the area of 7 percent for the first quarter of the year, then decline throughout the year, falling to 6.6 percent by the end of 2024. Rates will likely remain well above pandemic-era lows due to the growing consensus that the country will avoid a recession in 2024, according to the forecast.
Change will come
The new year will see dramatic changes to the real estate brokerage industry, following decades of the industry remaining largely impervious to change, Redfin predicted.
On the heels of a verdict in October in the hotly anticipated Sitzer | Burnett commission trial, Redfin says its agents are already encountering widespread discounting among its competitors, if not in the fee offered to the buyer’s agents then in commission refunds or in private listing agreements.
Redfin went so far as to predict that many homebuyers will choose to work directly with listing agents rather than work with a buyer’s agent, which may end up saving them thousands of dollars in commission fees.
A nation of renters
Redfin predicted more Americans will embrace the renter lifestyle as housing inventory remains low and expensive. Demand for large rental apartments and houses for rent will grow as families continue renting instead of purchasing a starter home.
Nearly one in five millennials who responded to a 2023 housing survey believe they will never own a home, the forecast notes, while half of those respondents said homes are too expensive and a similar share said they cannot afford to save for a down payment.
Prices of large rental units will climb next year as supply fails to meet demand, the forecast said.
Biden’s housing problem
Home prices are up 20 percent since Joe Biden took office, and that could hurt his reelection bid, Redfin said.
A recent poll found that 65 percent of voters disapprove of Biden’s handling of the economy, with lack of housing affordability likely a major factor. High housing costs mean most Americans feel poor, which is especially true among young people who don’t own a home and some who feel they may never own a home.
Democrats will likely focus on subsidizing down payments for first-time buyers, promoting inclusionary zoning and funding housing vouchers, while Republicans will likely focus on slashing regulations to allow for more home building, Redfin predicted.