A rise in mortgage rates in 2023 — which peaked at 8% in October — has brought the Triangle's hot housing market to a halt. But with rates falling to the 6% range, sales and competition are expected to pick up again in 2024.
Mark Parker, vice president of sales at Coldwell Banker HPW's downtown office, says he saw 20 people at an open house for a home in Raleigh's Glenlake South neighborhood on Saturday. This weekend turnout feels optimistic heading into the new year.
“If you had asked me the same question two months ago, I wouldn't have felt as optimistic as I do now,” Parker said. “A lot of it has to do with rates.”
As the Fed keeps its key interest rate steady and inflation begins to moderate, mortgage rates are falling. This trend is expected to continue until 2024.
“I think it's going to be a very strong market,” Parker said. “We may not see quite the craziness that we saw in 2022 and early 2023, and that primarily relates to homes that are on the market.”
The frenzy — mortgage rates falling to a record low with high demand for the few homes that came on the market — led to bidding wars and buyers lining up for open homes, especially those with low prices.
Realtor Derek Thornton doesn't expect another craze like this to happen in 2024.
“I don't think it's going to be that crazy, but there's definitely going to be a lot of multiple offers, a lot of excitement in the market if these prices start to come down,” he said.
Hunter Boyd, who helps buyers get a home loan through Sherri Riano's team at Clear Mortgage, says a 6% rate seemed high in 2022, but it seems more reasonable now.
Boyd's office saw a 40% increase in the number of mortgage applications last month. Buyers who sat on the sidelines when prices rose are returning to the home search.
“The week between Christmas and New Year's is usually very quiet,” he said. “This year, we have had many new mortgage applications every day, and many people going under contract between Christmas and New Year.”
“We've seen a significant increase in rates along with the increase in rates. That's reduced someone's purchasing power. Now, with those rates going down, it gives consumers more affordability to buy a home in today's market,” Parker said.
As buying a home becomes more affordable, there are also more options available. As of Jan. 1, there were more than 7,000 homes on the market in the Triangle. Last year, there were only 2,300.
This is good news for buyers and sellers.
The National Association of Realtors expects the median home sale price to rise 3.6% in 2024 in the Raleigh-Cary market and 5.8% in the Durham-Chapel Hill area.
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