Should You Buy a Home in 2024?

At the start of 2023, the U.S. housing market was still in a state of upheaval, but experts were optimistic that the tides were turning. While interest rates remained high following a competitive seller’s market post pandemic, bidding wars were expected to cool and inventory was expected to climb. 

As 2023 wraps up, many of those predictions have held true. While home prices and interest rates are still high, and many first-time buyers are struggling to enter the market, the market has not become more hostile. And there was an interesting twist: New construction skyrocketed as a way to increase inventory, making it palatable for current homeowners to trade up even if it meant doubling their current interest rate.

“High-interest rates have made things pretty challenging for home sellers who are selling their home in order to buy a new one—whether due to relocation, upsizing/downsizing, retiring, etc,” says Steve Nicastro, Content Team Lead at Clever Real Estate. “Think about how much it hurts to go from a 3 to 4% mortgage rate, that's locked in for 20 plus years, to a new mortgage at a 7 to 8% rate!”

Now, as 2023 comes to a close and we usher in a new year, you might be wondering if a new home is in the cards for you in 2024—or even if the housing market will crash in 2024.

“With elevated interest rates placing pressure on affordability, and general uncertainty about how they’ll trend, the real estate market has been stressful, particularly for buyers,” says Merav Bloch, VP and GM of Opendoor Exclusives.

In fact, people on both sides of the market are waiting for something to shift.

“Most folks are in a standoff, waiting for something to happen,” says Crystal Ledbetter, a Broker/REALTOR with Better Homes and Gardens Real Estate Paracle.

We asked experts for their insights into the current state of the market and their predictions for where it’s going in 2024.

The Recent Market

During and following the pandemic, in 2020 and 2021, buyers raced to outbid each other, offering well over asking price for homes they’d never seen in person. At the same time, interest rates were still low and investors saw opportunities to buy properties as well. Many homeowners took the opportunity to sell and make top dollar on their home, given those sky high prices. 

But since then, interest rates nearly doubled, and inventory dropped as a result. That’s because many current homeowners were suddenly wary of selling and losing their low interest rates. At the same time, first-time buyers found the interest rates coupled with home prices to be a major barrier for entry into the market. 

The market stabilized a bit over this past year, but experts believe there are still corrections to be made.

“The market continues to be fluid,” says Cristina Menendez, Realtor Associate at Brown Harris Stevens in Miami. “Buyers generally dictate market, so as they get used to interest rates, they will let sellers know their tolerance for the price and terms sellers are requesting.”

At the same time, many buyers have begun prioritizing both outdoor living space and features such as home gyms and home offices given the shift in work and lifestyle. 

“I don't think this will change anytime soon, as remote and hybrid work is likely here to stay,” Nicastro says.

The Current Market

Home prices remain high alongside interest rates, and while neither is expected to climb, many anticipate they’ll stay the same. 

“High-interest rates will continue to play a large factor in whether or not someone can afford to finance the purchase of a home,” Nicastro says. “Higher rates mean higher monthly mortgage payments, and higher costs over the life of the loan. This can make it really hard for people to buy a home, in particular, a first-time home buyer on a limited budget.”

Agent Monisha Rana of Coldwell Banker Warburg says many buyers are reluctant to buy now given how high those interest rates are. And at the same time, sellers are holding out, hopeful that they can still get top dollar for their homes after the bidding wars have cooled. 

“I’m hopeful that in 2024, this demand that has been sitting out in the market will finally succumb to the fact that rates aren’t going back to 2% in the near future, and if they want a new home, they’re going to have to bite the bullet and transact,” she says. “Of course, this also requires some supply to hit the market, as it feels like many sellers have been holding on to properties in the hopes of the prior bidding wars; they, too, will need to succumb to the fact that the inflated prices have recalibrated, and if they aren’t enjoying their property, it makes sense to sell.”

Menendez believes change is on the horizon as 2023 comes to a close. 

“A slowdown is coming. The demand is picking up,” she says. 

She points to two major changes in the market, the first from the federal government.

“The Biden administration announced a cut to mortgage insurance premiums for loans backed by the Federal Housing Administration, anticipating average annual savings of $800 for about 850,000 borrowers over the next year,” Menendez says. “Premiums will be reduced from 0.85% to 0.55% for mortgages signed on or after March 20.”

In addition, Fannie Mae announced updates to its program that will only require buyers of a multi-unit property to make a 5% downpayment vs. a 15 to 25% down payment, she says, encouraging more movement. 

If interest rates scare you, Nicastro suggests looking at new builds. 

“Builders may be offering promotions, such as paying your closing costs and/or offering a below-market mortgage rate,” he says. “For example, Pulte currently offers an APR of 6% on 30-year fixed rate mortgage, about 2 full percentage points below the market average.”

Predictions for the Future

Many current homeowners would rather spend the day stuck at the airport or talking to relatives about their love life than go through the process of selling their home, according to a new Opendoor survey conducted by the Harris Poll. Still, not even the current state of the market can deter all buyers from making moves, creating opportunities for other sellers and buyers.

“But, it’s also true that families grow, people take new jobs, and people still need to move,” Bloch says. “There is still movement in the market, and while listing volume may be down since 2022, millions of homes are changing hands each year.”

Larissa Arraiza-Pattison, a Realtor Associate with Better Homes and Gardens Real Estate Cocoa Beach, points out that rent continues to be expensive, and first-time home buyers would benefit from paying a mortgage vs. a landlord.

“My advice to first-time home buyers is to get pre-qualified and buy a home, pay off any credit card debt,” she says. “It is time to stop paying the landlord's mortgage and invest in your future. In the long run, it will end up saving them thousands of dollars in rent and unnecessary moving expenses related to landlords rising rents or being forced to move several times due to landlords deciding to sell.”

Menendez does not anticipate home prices in her region of South Florida dropping any time soon and believes the market will pick back up following the coming election. 

“Historically, after election cycles buyers tend to be more comfortable and activity increases,” she says. “The market took a major shift upward in 2021, and both buyers and sellers need to adjust and figure out where they’d like to make a move.”

But buyers will likely waste time and energy trying to time their purchase with a fickle market. 

“Since nobody has a crystal ball and can say for sure how rates will trend, I try to encourage buyers to focus on what they need, and what they can afford,” Bloch says. “If buyers need to move and can afford the monthly payment, they shouldn’t be spooked by interest rates: if rates increase, they’ll be locked in at a lower rate; if rates go down, they may be able to refinance, or even qualify for more house and trade up.”

Should You Buy a House in 2024?

Most experts agree, you should buy a home when you feel personally ready to own one and live in one and when your budget allows for it. Trying to time your personal milestones with the real estate market is a recipe for failure. 

“Moving is first and foremost a ‘life’ decision, frequently driven by milestones like having a baby, getting married, or reaching retirement and wanting to move closer to the grandchildren,” Bloch says. “Interest rates are one factor that will influence decisions about what and when to buy, but it is not the only one—or even, in many cases, the most important one.”

Instead, Bloch suggests starting by taking a look at your finances. 

“Evaluate your expenses and determine a budget: It may seem obvious, but start by assessing your monthly income and your debt,” she says.  

Then, get pre-approved for a loan to see how much house you can afford and what you’ll need to save up for a downpayment. Compare lenders and look for a good real estate agent. Then, decide what you want in a home. 

“Refine your list of criteria: Within a defined budget, you’ll typically have a choice between a more updated home in a less desirable location, or a less updated home in a more desirable location,” she says. “The choice is personal, and it’s a good idea to spend some time weighing the trade-offs.”

From there, you’ll be ready to make moves quickly should a home arrive on the market that fits your budget and criteria. 

And if you are a first-time home buyer, opting to pay for a mortgage vs. a lease makes a lot of sense in the current market. 

“If the interest rates stay at the current rate or fluctuate a little, I think consumers should still look at purchasing a home due to the long-term benefits and the security they'll feel as homeowners, not to mention the equity they can build throughout the years,” says Arraiza-Pattison. “It’s always a good time to buy a home.”