Updated: Boston Real Estate Blog 2023

That happened. Okay, now what?

That happened. Okay, now what? 2023 has been a tough year for Boston condo buyers. Low inventory, recession talks and of course the rise in mortgage interest rates. That happened in 2023. Okay, now what will 2024 bring to the Boston condo for sale market?

Realtor magazine asked the top Titians of real estate where they think the real estate market and interest rates will be heading in 2024.

Lawrence Yun, NAR’s chief economist

Lawrence Yun, NAR’s chief economist, believes mortgage rates could remain around 7 percent for most of 2024. However, he thinks rates have likely crested: “I believe we’ve already reached the peak in terms of interest rates.”. Within two years, he says, the rate should return to 5.5 or 6 percent.

Yun foresees no major changes in purchase price tags on a nationwide level next year, with fluctuations of only about 5 percent one way or the other.

While it may show bubble-like characteristics, Yun does not expect the residential real estate market to pop. He said, “A crash happens with oversupply,” Yun says. “A 30 percent decrease will not happen, because there isn’t enough inventory.” He believes the housing supply will balance out within five years.

Zillow:

Zillow has a similar forecast, as it expects home values to rise by 6.5% from July 2023 through July 2024, despite “despite persistent affordability challenges.”

Freddie Mac:

Likewise, Freddie Mac is forecasting prices rising by 0.8% between August 2023 and August 2024, followed by another 0.9% gain in the following 12 months. Part of the rebound in prices is based on the “large cohort of Millennial first-time homebuyers reaching prime home-buying age,” Freddie Mac reports.

The CoreLogic HPI Forecast

The CoreLogic HPI Forecast indicates that home prices will increase on a year-over-year basis by 2.9% from October 2023 to October 2024.

Rick Sharga said, “Home prices will probably rise slightly in 2024, perhaps by 2-3% as demand continues to outpace supply. However, this will not be universally true; some formerly high-flying markets like the Bay Area in California, Austin, and Phoenix could see prices continue to fall, while cities in the Southeastern states may see prices rise more quickly.”

Nick Ron, founder and CEO of House Buyers of America

Nick Ron, founder and CEO of House Buyers of America, expects average home prices in the U.S. to rise around 3 to 4% next year. “But at some point in 2024, I see a slowdown in price growth.

Goldman Sachs

Goldman Sachs analysts predict home prices will continue to climb before dipping this winter, then rebounding “only modestly” in 2024. Then, their model projects “a rebound to below-trend home price growth … as rates decline modestly but remain at elevated levels.” In December 2024, they predict national home prices will increase by 1.3% year over year. That’s a downward revision from July, when Goldman predicted a 1.7% home price increase in 2024. So far in 2023, home prices have increased an estimated 4.2% “but are likely to fall 0.8% through December for a 3.4% year over year increase,” Goldman analysts wrote.

Not all forecasts expect home prices to climb, however.

Redfin

Redfin thinks that home prices will fall 1% year over year in the second and third quarters, when the home-selling season is in full swing. That will mark the first time prices have declined since 2012, when the housing market was recovering from the Great Recession, with the exception of a brief period in the first half of 2023.

Morgan Stanley housing analysts

Morgan Stanley housing analysts expect home prices to hold steady year over year in 2023, before edging lower next year.? “We forecast house prices in 2023 to finish the year flat versus 2022 before falling 2% in 2024 as affordability continues to adjust slowly back to long-run averages and inventories begin a slow climb off multi-decade lows,” wrote the firm’s housing research team.

Moody’s

Moody’s says “it’s premature to celebrate the end of the housing correction,” which is why it expects median home prices to decrease by 3.5% between the fourth quarters of 2023 and 2024, according to an updated forecast.

Based on declining affordability and more homes being built, both Moody’s Analytics and Morgan Stanley expect home prices to fall slightly in 2024.

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