While the gap has narrowed, suburban rents continue to outpace urban rents in most major markets, specifically, 33 of the 50 largest metro areas. Throughout much of the pandemic, and even before, suburban rent prices were growing faster than rents in urban neighborhoods. More markets will follow New York City’s lead with rental demand surging near downtowns The ultralow mortgage rates held by many existing homeowners make it more likely that this option would pencil out. One possible path to more single-family rental inventory is homeowners deciding to turn their home into an investment property and rent it out rather than selling it when they move. Demand - and prices - for single-family rentals will continue to increase next year as families look for a more affordable option to enjoy amenities like a private backyard or a home that doesn’t share walls with neighbors. Though some improvement for home buying affordability is expected in 2024, many households will continue to be priced out. The new starter home will be a single-family rental Wage growth has held strong, meaning the share of income spent on a mortgage will fall next year even if costs remain the same. That would give time for wages and buyers’ savings to catch back up - welcome news after the rapid rise in housing costs over the past two years. Taken together, the cost of buying a home looks to be on track to level off next year, with the possibility of costs falling if mortgage rates do. Predicting how mortgage rates will move is a nearly impossible task, but recent inflation news gives the impression that rates are likely to hold fairly steady as well in the coming months. Zillow’s latest forecast calls for home values to hold steady in 2024, falling 0.2%. While affordability will undoubtedly remain the top concern for potential home buyers in 2024, there is reason to expect those challenges to ease just a bit. Home buying costs will level off, giving hopeful buyers a chance to catch upĪ typical home buyer in October would have spent more than 40% of their earnings on their mortgage payment - an all-time high in Zillow data, which stretches back to the 1990s. More homes on the market - even the gradual increase Zillow economists expect - would be good news for home buyers, spreading demand and easing upward pressure on prices. Many of those homeowners will have their eye on a home with a bigger (or no) backyard, an extra (or fewer) bedroom, or in their preferred neighborhood across town, and Zillow predicts more of these homeowners will end their holdout for lower rates and go ahead with those moves. With mortgage rates rising over the past two years, homeowners have been reluctant to sell, opting instead to hold onto the ultralow interest rate on their current mortgage. Expect more homeowners who locked in long-term payments when rates were near all-time lows to list their homes for sale, as they grow weary of waiting for the historically low rates of 2021 to return.Ī stubbornly small pool of homes for sale has kept competition fairly high for most of this year, even with high costs limiting the number of active buyers. It’s becoming clear that high mortgage rates have some staying power. “Higher for longer” is the key refrain regarding mortgage rates looking ahead to the next year in housing. Here are Zillow’s predictions for the housing market in 2024: More homes will hit the market as homeowners accept that mortgage rates aren’t falling any time soon Many of those who do buy will turn to homes that need some work, and do-it-yourself upgrades and repairs will keep new homeowners busy. In 2024, Zillow economists predict home buyers will have more options and a bit more affordability breathing room - but only a bit - after the inventory crunch and mortgage rates rising to 20-year highs were this year’s headline news items.īuying a home will remain expensive, keeping pressure on the rental market to cater to families that will be renting longer than previous generations typically were.
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