Can you believe we are already through the first month of 2024? While many embrace the new year, new me motto; the real estate market didn't get the memo and is looking very similar to 2023. Here are the main takeaways I'm seeing in the beginning of 2024:
Interest Rates: Mortgage applications experienced a surge with a drop in interest rates early in the month. However, rates trended back up to average in the high 6% to low 7% range as January. Prospective buyers are actively monitoring the market, awaiting the perfect moment for either favorable rates or the ideal property. Projections indicate a potential decline in interest rates throughout the year, although it is anyones guess when rates will notably come down.
Inventory: Inventory growth was a major theme in the last half of 2023, which was particularly evident in Pinellas County, where condos and townhome listings increased on average by hundreds of available units each month. Single-family homes followed suit, exhibiting an upward trend ranging between 100-300 units monthly for the final months of the year. Hillsborough County experienced a surge in both condo and single-family home inventory during late summer and fall, but were not as apparent as Pinellas and showed signs of stabilizing at the end of the year.
Pending Contracts: While data reveals a higher number of homes under contract compared to the previous year, the increased inventory is likely the reason. Despite elevated contract levels, inventory growth outpaces the rate at which buyers make acceptable offers which is leading to more inventory and longer market times.
Pricing: With the uptick in inventory, accurate pricing becomes paramount. Overpricing a property can lead to a home sitting on the market for much longer than necessary and usually leads to eventual price reductions or acceptance of offers below the initial asking price. The sellers who recognize this trend and price there homes correctly will have better success selling while some will hope for lower rates to come and help justify their higher price. As we navigate an election year and volatile interest rates, anticipating demand becomes challenging, but pricing a property too high might result in missing the optimal window for potential buyers.
Showings: The number of showings aligns closely with patterns observed in recent years, indicating a stable market in this regard.
New Listings: A notable increase in homeowners expressing interest in selling has been observed. I've seen the motivations vary, but generally it is lead by a change in lifestyle or needs. The most common reasons I've seen are growing families seeking larger spaces, downsizers looking to simplify, and homeowners trying to move before needed to pay for imminent big-ticket property needs. Insurance cost spikes are also contributing to a rise in property listings, particularly near the water in flood zones and condo owners facing substantial special assessments or large HOA fee increases. With more new construction homes being completed, I expect this will be one of the best years for new inventory that we have seen since the pandemic.
Investors: Despite challenges in penciling out favorable returns on many properties, investors remain keenly interested in the Tampa Bay area. The potential for improved returns may become more apparent if interest rates continue to decrease, making real estate a more attractive long-term investment option.
In summary, while interest rates continue to influence market dynamics, positive indicators suggest increased affordability and opportunities for buyers in 2024. Every property, neighborhood, and situation is unique. If you have specific inquiries or require personalized guidance, please feel free to reach out at 727-310-6360 or via email at [email protected].
