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 |  RAMZI CHAMAT | OAKS GROUP SA

The real estate market in the United States in 2024.

The real estate market is experiencing significant fluctuations, and the situation varies considerably from one country to another. This article focuses on the state of the real estate market in the United States in 2024, a reality quite different from what can be observed in Switzerland or other countries. With changing mortgage rates, limited supply, and ever-increasing prices, players in the American real estate market find themselves navigating a complex environment. In the following, we will explore current trends, accessibility challenges, and forecasts for the coming year, while providing practical strategies for American buyers and sellers.

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Introduction

 

The U.S. real estate market continues to raise concerns in 2024. Recent changes, including fluctuating mortgage rates, limited inventory, and price pressures, have redefined the experience for buyers and sellers in the United States. This article examines the current state of the American real estate market, the affordability challenges, and predictions for 2024-2025.

 

 

I. The Current Situation: Mortgage Rates and Home Prices in the U.S.

 

In September 2024, the U.S. Federal Reserve cut interest rates by 50 basis points. This decision, the first reduction in more than four years, led to a drop in mortgage rates, which recently reached their lowest level since February 2023. However, while this decline is a positive development for buyers, rates remain high compared to historical standards in the United States.

 

Meanwhile, home prices in the U.S. continue to rise, although at a slower pace. According to the S&P CoreLogic Case-Shiller Home Price Index, U.S. home prices increased by 5.4% year-over-year in June. While this increase is slightly lower than the 5.9% recorded in May, prices are still reaching record highs, making homeownership difficult for many potential American buyers. Experts predict that prices may stabilize towards the end of 2024 as inventory increases, but no substantial decrease is expected in either 2024 or 2025.

 

Lisa Sturtevant, chief economist at Bright MLS, points out that “the upward pressure on home prices makes this the most unaffordable housing market in history” in the United States. Buyers, while having some negotiating power in the current context, will continue to face challenges in 2024 and beyond.

 

 

II. Housing Inventory: Supply Remains Low in the U.S.

 

Despite some signs of improvement, the housing inventory in the United States remains limited, well below pre-pandemic levels. The increase in stocks is occurring gradually, but the situation remains critical. Many current homeowners are "locked in" to ultra-low mortgage rates and are reluctant to sell, knowing they would have to trade for higher rates in a market where home prices remain high.

 

New home construction in the U.S. provides some relief, but it is insufficient to bridge the inventory gap. New construction levels are at their highest since 2008, but it is not yet enough to meet growing demand. Thus, the American real estate market continues to be dominated by limited supply, further fueling the rise in home prices.

 

 

III. Affordability Challenges

 

The U.S. real estate market in 2024 is undoubtedly one of the most unaffordable in recent history. Even though mortgage rates are trending downward and home listings are seeing price reductions, the purchasing power remains out of reach for many potential buyers. Part of this challenge stems from recent changes in industry practices, such as the new rules imposed by the National Association of Realtors (NAR). These rules mean that buyers are now more likely to pay broker commissions, further impacting their budget.

 

With home prices continuing to rise and mortgage rates that, while lower, remain high, most American families with moderate incomes struggle to consider homeownership. The NAR Housing Affordability Index confirms this reality, with a preliminary reading of 93.3 in June – the lowest level this year in the United States. An index below 100 indicates that a median-priced home is unaffordable for a median-income family.

 

 

IV. Strategies for Buyers and Sellers in the U.S. Real Estate Market

 

In this context, American buyers and sellers must adopt smart strategies to optimize their real estate transactions:

 

For Buyers:

 

Understand Your Budget: Instead of focusing solely on the price, it is essential to calculate how much you can afford in terms of monthly payments. This includes not just the cost of the home, but also mortgage rates, property taxes, and insurance.

 

Be Flexible: Buyers may need to consider compromises, whether in terms of house size or location. Flexibility allows you to act quickly when a suitable property appears on the market.

 

Monitor the Market: Keeping a close eye on local inventory and price trends helps make informed decisions. A real estate agent can be a valuable asset in this process.

 

For Sellers:

 

Research Comparable Prices: Sellers need to be well-informed about the prices of similar homes in their area to set a competitive price.

 

Showcase Your Home: A home in excellent condition with strong “online curb appeal” is an asset. Buyers are looking for well-maintained properties with a strong visual appeal.

 

Work with a Local Agent: A real estate agent with in-depth knowledge of the local market can offer valuable advice and help you achieve the best sale price.

 

 

V. Outlook for 2025: A Slight Rebalancing in the U.S.?

 

Experts predict that 2025 could be a "better" year for the American housing market, but not necessarily a "great" one. The market will remain competitive, although mortgage rates are expected to continue to decline slightly, which could somewhat improve affordability.

 

However, expectations of a significant drop in U.S. home prices are low. Accumulated demand, fueled by a generation of Millennials entering their prime home-buying years and wage growth, are factors that will support housing demand in 2025. Yet, due to limited supply and mortgage rates that are unlikely to return to historically low levels, buyers will need to remain realistic about their expectations.

 

 

VI. Conclusion: Buy Now or Wait?

 

Buying a home in the United States in 2024 or waiting until 2025 remains a highly personal decision. The current market conditions, though inhospitable for many buyers, could either worsen or moderately improve. Experts advise not to focus solely on market fluctuations but to consider your needs, financial capacity, and long-term goals.

 

Waiting until 2025 carries risks, especially if mortgage rates fall rapidly and trigger a new wave of demand, making the market even more competitive. For those who are ready, the opportunity to buy and start building equity remains an option to seriously consider.

 

Thus, the American real estate market in 2024 is marked by affordability challenges, limited supply, and declining mortgage rates. Patience and strategy are key to navigating this challenging market, whether you are a buyer or a seller.

 

 

Ramzi Chamat

OAKS GROUP SA



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