Where could we see home prices rise in 2024? Fall?
A recent article from CBS News dove into the data to find which metros could see home prices rise and fall in 2024.
The projected top gainer? Redding, CA is expected to see a 7.30% increase in the median home price in 2024. A city of about 90,000 residents in Northern California, Redding currently has a median home price of about $375,000. The Santa Maria – Santa Barbara, CA metro area came in second place at 6.81%.
Experts are expecting that homebuyers will want to head to California, but they’ll look to stay out of the major cities and settle in outlying areas.
Florida has been one of the hottest markets in the country for the past few years, but experts are expecting Palm Bay-Melbourne-Titusville, West Palm Beach-Boca Raton-Delray Beach, Tampa-St. Petersburg-Clearwater, and Delta-Daytona Beach-Ormond Beach to be the top decliners in 2024. This is more of a cool off from elevated prices than a lack of interest.
Who owns most of the large homes in the U.S.?
Data on homeownership from Redfin News showed that the majority of large homes in the U.S. are still owned by empty-nest baby boomers. According to the data, 28% of the nation’s large homes are owned by baby boomers that don’t have children at home. Only 14% of the large homes in the country are owned by millennials with kids.
Empty nesters are staying in their large homes because affordability was better when they were younger, and they have no real incentive to move right now. Most own their homes outright and those who don’t have a much lower mortgage rate than what’s currently available.
Redfin senior economist Sheharya Bokhari said, “Boomers don’t have much motivation to sell, financially or otherwise. They typically have low housing costs, and the bulk of boomers are only in their 60s, still young enough that they can take care of themselves and their home without help. Still, some boomers are ready to downsize into a condo or move somewhere new for retirement, and the mortgage-rate lock-in effect is starting to ease–so even though there won’t be a flood of inventory, there will be a trickle.”
Will the Fed move quickly with rate cuts?
Federal Reserve Governor Christopher Waller participated in a Q&A session at the Brookings Institute on Tuesday. He did acknowledge that rate cuts are likely this year, but also emphasized that the central bank is in no hurry to cut rates.
Waller stated, “As long as inflation doesn’t rebound and stay elevated, I believe the [Federal Open Market Committee] will be able to lower the target range for the federal funds rate this year.”
He went on to say, “When the time is right to begin lowering rates, I believe it can and should be lowered methodically and carefully. In many previous cycles … the FOMC cut rates reactively and did so quickly and often by large amounts. This cycle, however, … I see no reason to move as quickly or cut as rapidly as in the past.”
The market is predicting a 67% chance that the FOMC will start cutting rates in March. However, recent inflation data came in slightly hotter than expected, and may give the Fed pause when it comes to rate cuts.
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