The 2024 real estate market was one for the records books, and not in a way that we’d hoped. Pent-up inventory of available homes for sale continued, even  through the traditionally busy spring market. It took some time for homebuyers to settle into the realization that 3% interest rates are a thing of the past. The economic and political climates, both globally and nationally, had many sellers and buyers holding tight through the election season. A hard look at market data reflects those anecdotal observations.

Inventory

Comparing year-over-year data, we saw an average monthly increase in inventory of about 10%. While this may seem significant, we are still deep in a sellers’ market with an average of 2.25 months’ supply of homes for sale throughout the year. In a balanced market, we would see about 6 months’ supply of homes for sale.

Interest Rates

Throughout 2024, interest rates hovered in the high 6% range and jumped over 7% into the second quarter. A slight reprieve occurred early the third quarter when rates dipped below 6%. Because inflation has not yet dropped to the Fed’s preferred mark of 2%, a cut in interest rates is not expected before later in the second quarter. Ultimately, trusted economists look to interest rates settling around the mid 6% range in 2025. For more on the greater economic impact on interest rates, keep tabs on the Economic Minute section of this and upcoming newsletters.

Expectations for Buyer Demand

2025 ushers in fifteen years of the Millennial generation reaching peak buying years. Approaching their mid-forties, this group will statistically be ready to use their first home equity to make a move-up from that first purchase of a condo, townhouse, or modest single-family home to something that better meets the needs and wants of their evolving lifestyle. As the Millennial need for inventory picks up, we’ll see 10,000 Baby Boomers a day turn 65 and enter the age of retirement and down-sizing. With these two generational shifts occurring simultaneously over the course of more than a decade, we expect increasing movement in the real estate market to start in 2025.

Looking Forward
While careful analysis of data and historical trends equips us to make macro-level predictions about the market in the upcoming year, we wholeheartedly recognize that each person’s interaction in the real estate market is unique. Regardless of what brings you into the position of buying or selling a home, adding a vacation home, or expanding your portfolio through real estate investment, our goal is to ensure you have an exceptional experience customized to your needs.