December 2023 Real Estate Market Update

December 13, 2023

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December 2023 Real Estate Market Update

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It is an unpredictable market right now in real estate, but a glance at the expert forecasts may provide some insight into some of the biggest concerns: Home prices, home sales, affordability, mortgage rates, inventory, demand, and equity.



Home price forecasts are all over the place – from 4% appreciation to 1.7% depreciation. Overall, the experts are forecasting an average of 1.5% appreciation. Although we have averaged 4.92% appreciation over the past 40 years, it would not be surprising to see a relatively flat appreciation in 2024, as we come off of historically high, double-digit appreciation post-pandemic. However, a lower than normal appreciation for 2024 is not bad news – it would help affordability. We need home prices to slow, wages to increase, and, most importantly, mortgage rates to moderate.



According to the National Association of Realtor’s Affordability Index, we are far from the 13.3% of household income going towards your monthly housing expense in January of 2021, but closer to the norm of 25%. Affordability may seem astronomical, but only when compared to what we’ve been used to.



Just like mortgage rates, affordability is just returning to a more historically normal place.



The 10-year average of total home sales, minus the extraordinary post-pandemic years, is 5.2 million, which is not far off from the 5.1 million average expert forecast for 2024. So, while home prices will remain relatively moderate, sales should pick up.



Plus, with the current mortgage rate trend, we should see a very active market this coming year if that drives more inventory to the market.



And more inventory is something we desperately need right now.



And it may be coming, because November is typically a month when we see inventory decrease. But, year-over-year, this November inventory increased for the first time since 2017. A wonderful sign.



The numbers on buyer demand are good, but we won’t delve too much into that since the figures are skewed due to the lack of inventory. However, nationally we are reporting an average of 2.5 offers on homes for sale with an average number of days on market of 50 days. That’s fantastic, and a sign that there is strong demand.




And a lot of those buyers should be first-time homebuyers who cannot ignore the equity earned over time. According to the Federal Housing Finance Agency, home prices are up 306% nationally in the past 30 years. While rents in some areas may be less than a mortgage payment now, you forgo the equity you could be earning over time.  



And when you hear that home prices are falling, keep in mind that means appreciation is slowing, which is completely normal when looking at the seasonal trend for home prices. They are rising at a slower pace.


Overall, it seems like mortgage rates are falling, inventory is starting to come back to the market, buyers still want to buy, and appropriately priced homes are seeing multiple offers and selling relatively quickly.


Finally, here is how we wrapped up last month in Tallahassee:


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