SF Bay Area:
New Listings Hitting Market 2005-2023
Alameda County:
Number of Home Sales 2005 - 2023
We Should See More Homes for Sale
Recent interest rate drops – with more anticipated – will not only enable more buyers to move ahead with purchases … they should help sellers step out of what has become known as “interest rate lockdown.” Three out of four homes with mortgages have rates under 4%, making owners loath to give up their low-rate mortgage if selling and moving means they face a much higher rate on their next purchase. But those who’ve delayed plans to downsize, retire near family, or relocate for work become more willing to sell and keep their lives on track as rates moderate.
The mortgage Banker’s Association (MBA) predicts the number of home sales will increase by 6% in 2024 over 2023, and the NAR’s chief economist Lawrence Yun predicts we’ll see as much as 13.5% more homes sell nationally by year-end. An even rosier prediction from the NAR is that we could even see nearly 30% more homes hit the market this year (meaning the number “listed” but not the number “sold”) … which if mirrored locally would be a significant increase potentially returning our market to pre-pandemic numbers of homes available for sale.
WHEN AND HOW MUCH IMPROVEMENT MAY WE SEE? Just when and how much things might improve further is a coin-toss. The jury is still out on whether we’ve entered or still may face a mild first quarter-to first half-year 2024 recession, and whether we’ve achieved the hoped for “soft landing” after the Fed’s record 11 interest rate hikes since May 2022, or need to face more pain. The Fed has announced it will cut rates three times this year – which should bring lower mortgage rates. Some predict that’s a minimum and that there will be more numerous cuts; some say the expected cuts have already been priced into mortgage rates. Some expect Fed cuts (and resultantly further mortgage rate improvements) to come as soon as May, other say not before summer. Regardless of which voices you believe, the MBA and NAR both forecast mortgage rates should end the year around or just below 6%.
Perspective? This year’s current and projected mortgage rates are well below the 30-year average mortgage rate, which is closer to 7% -- spoken to you by someone who made my first home purchase in the early 1980s when mortgages were in the double-digits. In other words … what we’re experiencing in mortgage rates just might be “more normal” than many think.
Mortgage Rates: 30 Years
Mortgage Rates: 2023
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