Real Estate Market Update - February 2024
Real Estate Market Update
Many economists and market analysts had been forecasting the Federal Reserve would make three to seven federal funds rate cuts in 2024 to respond to declining inflation and consumer demand together with a rise in unemployment and a slowing economy. However, recent data released during the past two weeks, including the Consumer Price Index (CPI) and Producer Price Index (PPI), indicates unexpected economic growth, persistent inflation, and labor market strength. Accordingly, the Federal Reserve is now expected to delay fed funds rate cuts until there is more data supporting economic slowing. The good news is it’s highly unlikely the Federal Reserve will continue increasing the Fed funds rate, but it appears Fed funds rate cuts for 2024 may be limited and/or delayed until after the presidential election. Therefore, it appears that 30-year fixed mortgage interest rates will range from approximately 6.5% to 7.2% in 2024. Overall, sales activity will probably continue to be historically low, but greater than it was in 2023, as the market continues adjusting and reverting to the mean. The average 30-year fixed mortgage interest rate for over 50 years, i.e. from April 1971 to February 2024, is approximately 7.74% (see last month’s report for graph).
The Seattle-Bellevue residential real estate market during January 2024 continued the seasonal sales trend as properties going under contract (pended) increased as indicated in the two graphs below for single-family homes in King County:
Based on current data and economic conditions, it appears that demand (Buyers) will slowly continue to increase more than supply (homes for sale), which will produce upward pressure on home values. It’s a very tight marketplace.
Guidance for Buyers
The 2023 Seller’s market has continued into 2024 as the pool of ready, willing, and able Buyers exceeds the supply of homes for sale, which is at historic +10-year lows. Be prepared for the need to pre-inspect properties in a short amount of time and negotiate competitive offers that escalate in value. I would be happy to guide you through the process.
I do not recommend trying to time the market based on interest rate decreases, assuming you intend to own the home five years or more. It’s about time in the markets, not timing the markets.
Guidance for Sellers
The ideal time to sell (list) a property is from late February until mid-May. Keep in mind you will likely require approximately two months to schedule contractors to prepare the property, if necessary, and stage it. Stagers will be booked out for six to eight weeks and photographers for three to four weeks. I understand that any related sales expenses (e.g. brokerage fees, listing preparation costs, staging fees, etc.) can be deducted from your taxable gain. Please consult with your Certified Public Accountant (CPA) to confirm. See this article, Sold Your Home This Year? Consider Writing Off Some Common Expenses.