Quietly over the past month or so interest rates have dropped nearly a full percentage point. This means many buyers are jumping back into the mix for buying their next home, and sellers are considering making a lateral move to their next property. The reason we saw market activity more stagnant throughout 2023 was that over 90% of homeowners with a mortgage had an interest rate below 6%. This wiped out any motivation for them to make changes even if their current living situation was not ideal. Now that interest rates are beginning to drop I am getting many more inquires from buyers and sellers about making changes early next year for their next real estate transition.
I already expected that 2024 would have some key variables that would make it different from previous years in real estate. One factor that stands out is that the current government administration is focused on hitting economic milestones leading up to the election this fall. This means that we can likely expect a trend towards lower interest rates over the next few quarters as potential home buyers grieve about housing affordability and the challenges of purchasing a new home.
I am generally conservative with my predictions, and always like to set realistic expectations with my clients. The trend I am expecting right now is that there is a window for Q1 where I am pushing my buyers to get into contract as soon as possible on their next home before the market has a delayed response in a potential rise in housing prices. We will likely continue to still see a shortage of inventory which means if buyers can get in now while interest rates have gone down they can take advantage of this window to buy before we see a delayed response in a rise of prices.
Keller Williams Realty Danville
CA DRE # 02108792