Tuesday, December 26, 2023 / by Amy Brown
Let's answer a few key questions:
Will there be more inventory?
Yes! Inventory will rise according to the traditional real estate buying/selling season in the Spring, however, with sellers reluctant to let go of previously achieved low mortgage rates, there will be less inventory than usual, keeping the market strongly in the sellers' hands. Today, we are holding 2.2 months of inventory in Buncombe county with that number steadily rising since June of 2022. Inventory is expected to continue to rise as interest rates fall throughout the year, culminating in a prediction of 3.5 months of inventory by mid summer as sellers take advantage of the interest rate drop to go ahead and make a move while they can. With that being said, inventory will remain at lower than average numbers for this year keeping competition for the best homes high.
How much will mortgage rates drop?
That number is impossible to know for certain but experts at realtor.com are predicting that interest rates will drop in small increments averaging out at approximately 6.5%. And while that may not seem like good news, a sharp, immediate decline in rates would mean a flood of buyers into the marketplace, thus drastically increasing home prices and competition...something we definitely don't want. As a buyer or a seller we are looking for a much calmer market to avoid the previously experienced "pandemic purchase" regret. Optimally as sellers become buyers I would like to see them have the same opportunities for a well thought out purchase to find their next home. Today's 30-yr. conventional rate is at 6.633%.
Will home prices drop?
Yes! Home prices are expected to drop nationwide by 1.7% in 2024 as more buyers sit on the sidelines waiting for their dream home to appear. With the decline in demand buyers can anticipate easier negotiations and less competition when they do find the right home.
From a local market standpoint, that is not exactly reflected today as the average home price is at $621,000 and still on the rise. But indicators are showing that this will be the case in the coming months as the percent of list price received for sellers in our county has dropped to 96.5%; the lowest percentage in 3 years.
What will happen to the rental market?
As sellers who truly need to move for job relocation, expanding families, or downsizing to more affordable markets, the rental market will continue to remain a lucrative investment for those looking to purchase rental properties. As the economy tightens, short term rentals have stalled marginally but the long-term rental market is continuing to grow as people look for interim housing and young homebuyers who would have bought at lower interest rates are now waiting for the market to cool somewhat. Real estate investment remains a smart one, it just may look a bit different than you originally planned. Currently the average single family home in the Asheville suburbs rents for $2300/month and the average city condo rents for $2500/month.
How can homebuyers prepare?
Make sure that you are financially ready so that when you see the right home, you are ready to make that offer.
Here is the best tool to assist.
Go to https://sellingavl.com/search-mls/
Click on any listing that you are interested in
On the left hand side is a mortgage calculator
This will be your best tool to estimate monthly payments, down payments, and how that numbers changes according to loan type
What will the market be like for home sellers?
2024 will be the year of the builder so resale homes will be competing with new construction. Make sure that you discuss a comparative market analysis with your agent BEFORE you set the price to determine if you are in line with the competition. Remember that your home is valued at what someone is willing to pay for it, so if that number does not coincide with your goals, then this may not be the year to sell.
How do I know if buying or renting is a better option?
Even realtors use tools from outside sources and I like to use realtor.com's rent vs. buy calculator. https://www.realtor.com/mortgage/tools/rent-or-buy-calculator/
For a $400,000 home with 20% down, it is actually cheaper to buy in Asheville than it is to rent if you stay in your home for 4 years.
So there you have it! While it may not have been the stellar news that you were hoping for, the sun is coming up on the horizon. Remember that real estate is cyclical and what goes down...must come up!
Have a great day and I'm looking forward to the New Year...I hope you are too!