In the realm of Utah real estate, the year 2023 has proven to be a puzzle, with perplexing data leaving both industry insiders and potential buyers, sellers, and renters scratching their heads. Mortgage rates surged to an alarming 8%, affordability hit record lows, and home sales were at their lowest since 1993. On the flip side, home prices have soared to unprecedented heights, reaching a new peak in September 2023. As a Utah real estate broker, I find myself at the crossroads of deciphering these market dynamics, contemplating the contrasting predictions of financial giants like Morgan Stanley and Wells Fargo, and strategizing for the upcoming year. I have researched at length and in this blog, I will explore and attempt to unravel the intricacies of the current housing market, examine the echoes of the 1980s recession, and delve into the crystal ball to glimpse the potential scenarios that may unfold in 2024.
House Party in Recessions:
Alright, history buffs, let's talk about the spicy relationship between economic recessions and the housing market. The Great Depression of 1929 - a total blockbuster where the housing market took a 67% nosedive and needed over three decades to dust itself off. Fast forward to the 1990s savings and loans crisis and the 2008 financial fiesta, and you've got some serious drama. But guess what? Our resilient housing market has aced the recessions test, thriving in the face of adversity.
Back to the Future: The 1980s Remix:
Wells Fargo drops a bombshell – we're heading for a 1980s-style housing shindig! But wait, there's a twist – they predict housing prices will pop like confetti by 4.4% in 2025. Cue the flashback to President Nixon's Gold Standard exit, triggering a chain reaction of events. Real estate, faced with inflation and sky-high interest rates, played it cool with a slower but steady price hike. Wells Fargo's crystal ball sees a 1.8% price increase by year-end, 2.5% in 2024, and a grand 4.4% in 2025. How's that for a plot twist?
The Year of Rollercoaster Rides:
Morgan Stanley saunters in with a different script, foreseeing improvements in prices, rents, and affordability in 2024. Get ready for the first-half slump in home sales, followed by a rebound fueled by affordability perks. They're throwing in Federal Reserve interest rate cuts, a dash of increased listings, and mortgages as easy to get as your favorite midnight snack. But hold onto your popcorn, because the rollercoaster of unpredictable interest rate antics from 2023 could add a sprinkle of suspense.
Rock, Paper, Scissors – No, Rock Bottom:
RedFin declares 2023 as the year we hit "rock bottom" in the housing game. Sure, prices didn't nosedive, but we're in the land of historically low inventory, mortgage rates touching the sky, and affordability playing hide and seek. The silver lining? According to the RedFin CEO, the only good thing about the housing market is that, well, it can't get much worse from here. Cue collective sighs of relief – we're not in a 2008-style race to the bottom. It's more like a chill dance party where homeowners, facing life changes, add some inventory to the mix without the foreclosure panic.
2024: The Year of Market Mysteries:
Now, let's don our detective hats again and peek into 2024. Investors are bets toward a mid-year Federal Reserve interest rate cut, with a whopping $5.7 trillion in cash lurking in money-market funds, just waiting to spice up the real estate and stock party. Affordability challenges are throwing a curveball, but the market is stuck in a nail-biting stalemate with eager bidders eyeing limited inventory.
Plot Twist – My Personal Take:
As your real estate guide since 2006, I'll spill the beans – buying isn’t the short-term star of our show. Renting is having its moment in the spotlight, with good deals playing hide and seek in this competitive arena. Me? I'm vibing with the "wait-and-see approach." The commercial real estate scene is throwing low returns at me, and I'm side-eyeing it while enjoying the drama-free alternatives like treasuries.
Top 10 Housing Predictions for the Blockbuster Sequel – 2024:
No Bubble Trouble: Forget about housing bubbles – the sequel is all about continued growth and those mortgage rates playing hard to get.
Mortgage Rate Tango: Experts predict a smooth dance with mortgage rates dropping to a cool 6% by the finale, tossing fears of an 8% rate into the plot twists bin.
Listing Drama Unleashed: The aftermath of rate-locked homeowners is dragging into 2024, but get ready for the dramatic surge in listings as rates take a more favorable turn.
Home Price Cliffhanger: The experts are hinting at a 1% growth in home prices for the grand finale, with the possibility of prices pulling off a stability act.
Crash Revival: Markets that took a tumble might just make a comeback – cue the suspenseful music because cyclical patterns are keeping us all on the edge of our seats.
New Construction Extravaganza: Homebuilders are ready to steal the spotlight, offering sweet deals like below-market mortgages and rate buy-downs. Warren Buffett, are you watching?
Stable Housing Haute Couture: Forget the gloom – housing affordability is set to rock the stability runway, with home prices growing modestly and mortgage rates doing a little dance downwards.
Government Housing Makeover: It's time for the government to put on its housing makeover show – policies need a revamp to ease restrictions and streamline the building process.
Foreclosure Nostalgia: Take a stroll down memory lane with the foreclosure nostalgia – but hold your horses, we're not in 2008. Delinquency levels might rise, but it's more like a gentle nod to the past.
Sales Spectacle: Sellers are getting their time in the spotlight in 2024, with a minor uptick in home sales – we're talking a 0.1% rise to around 4.07 million. It's a sequel, not a blockbuster explosion!
Grand Finale – The Curtain Call:
As we navigate the rollercoaster of Utah real estate, 2023's puzzle sets the stage for an epic 2024 blockbuster. Will Morgan Stanley's plotline play out, or will Wells Fargo's '80s-style housing reunion steal the show? RedFin's declaration of "rock bottom" adds a touch of mystery. In this uncertainty, our secret weapon is a strategic mix of caution and a meticulous "wait-and-see approach." As your trusty Utah real estate guide, I'm committed to staying ahead of the curve, offering savvy advice to all you adventurers navigating these uncharted market waters. Stick around – the Utah real estate saga is far from over.
If you have any real estate questions or are looking to buy or sell your home in Heber City, Midway, Utah or Salt Lake Counties, please reach out to me with any questions. Please reach out to me at (801) 885-2558 or by email at brandonrwood19@gmail.com.