Zillow predicts more homes for sale, improved affordability in 2024 (2024)

Home buying will remain expensive, so expect a competitive market for homes that need some work and for single-family rentals

  • Affordability will remain a challenge, but Zillow expects buyers to have more options and a bit more financial breathing room in 2024.
  • Rental market competition will be strong, especially for single-family rentals and units with an easy commute to downtown office hubs.
  • Artificial intelligence in real estate will make a leap, improving the home-buying and selling process for buyers, sellers and their agents.

SEATTLE, Nov. 30, 2023 /PRNewswire/ -- The housing market's headline news this year has been the affordability challenge brought on by mortgage rates reaching 20-year highs. Looking ahead to 2024, Zillow® predictshome buyers will have a bit more breathing room — but only a bit.

Zillow predicts more homes for sale, improved affordability in 2024 (1)

Buying a home will remain expensive, keeping pressure on the rental market to cater to families that will be renting for longer than previous generations. Many who buy will turn to homes that need some work, according to Zillow's predictions, and do-it-yourself upgrades and repairs will keep new homeowners busy.

"I expect the beginning of a long healing process to kick off in the housing market next year," said Skylar Olsen, Zillow chief economist. "We know there are a huge number of households in prime home-buying ages waiting for the winds to turn in their favor. While still presenting challenges, the market will be better for buyers, with more homes to choose from and improved affordability. Many will continue to look toward rentals, and given renter demographics single-family rental demand in particular will be strong. Recent deliveries should keep rent growth down, and concessions high in that market, too. This is our breather year."

More homes will hit the market as homeowners accept that current mortgage rates are sticking around
"Higher for longer" is the key refrain regarding mortgage rates as Zillow economists look ahead to the next year in housing. It's becoming clear that high mortgage rates have some staying power. Zillow economists expect more homeowners who locked in long-term payments when rates were near all-time lows to list their homes for sale, as they grow weary of waiting for the historically low rates of 2021 to return.

A very small pool of homes for sale has kept competition fairly stiff for most of this year, even with high costs limiting the number of shoppers. With mortgage rates rising over the past two years, homeowners have been reluctant to sell, opting instead to hold onto the ultralow interest rate on their current mortgage. Many of those homeowners will have their eye on a home with a bigger backyard, an extra bedroom or in their preferred neighborhood across town, and Zillow predicts more of these homeowners will end their holdout for lower rates and go ahead with those moves.

More homes on the market would be good news for buyers, spreading demand and slowing price growth.

Home-buying costs will level off, giving hopeful buyers a chance to catch up
A typical home buyer in October would have spent more than 40% of their earnings on their mortgage payment— an all-time high according to Zillow data, which stretches back to the 1990s. While affordability will undoubtedly remain the top concern for potential home buyers in 2024, there is reason to expect those challenges to ease just a bit.

Zillow's latest forecast calls for home values to hold steady in 2024. Predicting how mortgage rates will move is a nearly impossible task, but recent inflation newsgives the impression that rates are likely to hold fairly steady as well in the coming months.

The cost of buying a home looks likely to level off next year, with the possibility of costs falling if mortgage rates do. That would give time for wages and buyers' savings to grow — welcome news after the rapid rise in housing costs over the past two years.

The new starter home will be a single-family rental
Though Zillow expects some improvement in home-buying affordability in 2024, many households will still be priced out. The median renter is now 41 years old, up from 37 in 2000, and the types of rentals they're interested in has likely shifted.i

Zillow predicts demand — and prices — for single-family rentals will continue to increase next year as families look for a more affordable option for enjoying amenities like a private backyard or a home that doesn't share walls with neighbors.

One possible path to more single-family rentals could lie in homeowners deciding to turn their home into an investment property and rent it out, rather than selling it when they move. The ultralow mortgage rates held by many existing homeowners make it more likely that this option would pencil out.

Zillow Rental Manageroffers a suite of tools — including free listings, pricing suggestions, background checks, online applications and state-specific lease generation — designed to provide comprehensive support for those seeking rental income from their homes.

More markets will follow New York City's lead, with rental demand surging near downtowns
Throughout much of the pandemic, and even before, suburban rent prices were growing faster than rents in urban neighborhoods.ii While the gap has narrowed, suburban rents continue to outpace urban rents in most major markets, specifically, 33 of the 50 largest metro areas.iii

In New York City, data from StreetEasy, Zillow Group's New York City real estate marketplace, shows demand is surging for rentals in commutable areas with easy access to Downtown or Midtown Manhattan, while areas farther from these office-laden neighborhoods are seeing relatively less demand. StreetEasy experts predicta strong year for Manhattan demand in 2024, and Zillow foresees more markets following suit, with rental demand surging near downtown centers.

Renters looking for a place near downtown will likely have more options with this year's multifamily-construction boom, which means a huge number of new homes have hit the market. More choices for renters looking for a new place means landlords who are trying to attract tenants have more reason to compete with each other on price. That's a key reason more rental listings are offering concessions.

Traditional home buyers will compete with flippers for homes that need a little TLC
Typically the target of home flippers, homes that need a little work before they qualify for "dream home" status will see increased interest from buyers looking to move in.

Inventory has been far below normal for a while, and though Zillow economists predict more homes will hit the market in 2024, inventory will remain much lower than pre-pandemic norms. Faced with limited choices, buyers will be willing to overlook small flaws, such as an outdated bathroom or kitchen.

The higher cost of buying a home today makes a flip harder to pencil out, so buyers may face less competition from flippers than they might have in previous years. Even with less chance of being subject to a bidding war, these homes won't come cheap, so expect buyers to frequent their local hardware stores as they work on DIY home improvements. If Zillow's 2024 home trends to watchare any indication, expect brutalist-inspired features and sensory gardens to be on home improvement to-do lists, but not "cloffices" or Tuscan kitchen designs.

Artificial intelligence will enhance the home search experience
Since 2006, Zillow has been leveraging AI and machine learning to power the Zestimate. Generative AI made waves this year, and Zillow expects AI advancements to streamline the home-shopping and home-selling journey in 2024, improving the experience of buyers, sellers and their agents.

Zillow tech experts expect a variety of new tools and technologies designed for real estate agents next year, allowing them more time to connect with more clients and prioritize face-to-face interactions. Agents have been using AI to assist with writing listing descriptions and to create 3D content for their listings. Next year's advancements are expected to focus on visual and multimodal capabilities, including more rich media content.

Expect home shoppers to benefit from generative-AI-powered experiences to glean valuable insights and guidance on home financing.

AboutZillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, great partners, and easier buying, selling, financing and renting experiences.

Zillow Group's affiliates, subsidiaries and brands include Zillow®, Zillow Premier Agent®, Zillow Home Loans℠, Trulia®, Out East®, StreetEasy®, HotPads®, ShowingTime+, and Spruce®.

All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a Zillow affiliate.

iBased on a Zillow review of the U.S. Census Bureau's Current Population Survey. Renters are defined as being a head of household in a household that rents their primary residence.
ii According to Zillow Observed Rent Index data at the ZIP code level. ZIP codes were classified as urban, suburban or rural, and month-over-month and year-over-year changes were then aggregated nationally and across metro areas for each classification; those changes were then averaged.
iii Year-over-year changes, as of October 2023.

SOURCE Zillow

Zillow predicts more homes for sale, improved affordability in 2024 (2024)

FAQs

Zillow predicts more homes for sale, improved affordability in 2024? ›

Zillow predicts more homes for sale, improved affordability in 2024. In 2024, Zillow economists predict home buyers will have more options and a bit more affordability breathing room — but only a bit — after the inventory crunch and mortgage rates rising to 20-year highs were this year's headline news items.

Will Zillow predict housing market will be hot in 2024? ›

Zillow now projects 4.12 million existing home sales in 2024, indicating a 0.9% growth over last year. With a persistent rise in housing inventory in recent months, the market is experiencing a gradual, albeit still modest, shift in favor of buyers.

Will 2024 be a good time to buy a house? ›

The combination of high mortgage rates, steep home prices and low inventory levels are lining up to make the 2024 housing market a challenging one for both buyers and sellers. But rates have cooled a bit — if that continues throughout the year, as some experts predict, then market activity should heat up in response.

Will US house prices go down in 2024? ›

Most experts do not expect a housing market crash in 2024 since many homeowners have built up significant home equity. The issue is primarily an affordability crisis. High interest rates and inflated home values have made purchasing a home challenging for first-time homebuyers.

What is the NYC real estate market forecast for 2024? ›

The forecast for the NYC real estate market in 2024 indicates a dynamic environment where pricing and inventory levels fluctuate. Market analyses suggest a degree of uncertainty, with prices experiencing modest adjustments.

What is the market prediction for 2024? ›

Growth Slowing, but Recession Unlikely

“We're still expecting the sequential growth rates to drop sharply over the rest of 2024 and remain low through early 2025,” Morningstar chief US economist Preston Caldwell wrote in his July economic outlook. He's forecasting 2.4% GDP growth for 2024 and 1.4% for 2025.

What is the interest rate forecast for housing in 2024? ›



Economists at Freddie Mac expect mortgage rates to stay above 6.5% throughout the end of 2024, according to its June Economic, Housing and Mortgage Market Outlook. The mortgage giant anticipates one rate cut later this year – as long as the job market slows down enough to temper inflation.

Should I sell my house now or wait until 2024? ›

Best Time to Sell Your House for a Higher Price

April, June, and July are the best months to sell your house in California. The median sale price of houses in June 2023, was $796,400, which is expected to grow more in 2024. However, cities like Arcadia and San Mateo follow an upward trend throughout the year.

Will 2024 be a better year to buy? ›

"2024 is bound to be a better year for homebuyers, if only because of how terrible 2023 was," says John Graff, CEO at Ashby & Graff Real Estate. Graff anticipates falling interest rates and increasing inventory could result in more opportunities for homebuyers in the months ahead.

What time of year is best to buy a house? ›

Spring is generally viewed as the best time of the year to buy a house if you want to choose from a large inventory. Homes also tend to present better in the warmer months – plants are in bloom, and lawns are green, so this is a popular time for sellers to put their houses on the market.

Should I buy a house now or wait for a recession? ›

And as you might imagine, recessions are a risky time to buy a home. If you lose your job, for example, a lender will be much less likely to approve your loan application. Even if the recession doesn't affect you directly, if your area is hard-hit, that could have a serious effect on the local real estate market.

What is the average home price in the USA? ›

The average home price in the United States was $495,100 in the second quarter of 2023, according to the Census Bureau and Department of Housing and Urban Development. By comparison, the median U.S. home price in June 2023 was $426,056, according to Redfin.

How is the US housing market? ›

But the sector over the last five years has evolved into more of a sellers' market. Compared to May 2019, median list prices are up 37.5 percent while the supply of homes was down more than 34 percent, a dynamic that is escalating competition from buyers, leading to a rise in prices.

Is 2024 a good year to buy a home? ›

Buying a home this year, particularly in early 2024, might mean you're able to beat the rush, as the market could get more crowded if or when rates drop further. Waiting, however, could give you more options to choose from as supply improves, along with the potential for increased mortgage affordability.

Are NYC real estate prices dropping? ›

Based on data from StreetEasy, the median sales price for homes that sold in 2023 was $764K, down about 2% from a record high of $782K in 2022 but back up to $785K in early 2024.

Are NYC rents coming down? ›

New Yorkers will see a calmer rental market in 2024, after inventory shortages led to strong competition for rentals this year. As inventory rises further next year, citywide rent growth will slow, although a sharp drop is unlikely due to still-limited inventory compared to pre-pandemic levels.

How many saves on Zillow is good in 2024? ›

According to Zillow, properties with more than 30 saves tend to sell faster. They also go closer to their listing price than those with fewer saves.

Will the housing market be better in 2026? ›

Economists at Bank of America warned this week that the US housing market is “stuck and we are not convinced it will become unstuck” until 2026 — or later. The bank said home prices will stay high and go even higher. The housing shortage will persist.

How is the housing market in Tampa in 2024? ›

Tampa, FL housing market

In May 2024, the median listing home price in Tampa, FL was $483.7K, flat year-over-year. The median listing home price per square foot was $295. The median home sold price was $382.5K.

References

Top Articles
Latest Posts
Article information

Author: Trent Wehner

Last Updated:

Views: 6134

Rating: 4.6 / 5 (76 voted)

Reviews: 91% of readers found this page helpful

Author information

Name: Trent Wehner

Birthday: 1993-03-14

Address: 872 Kevin Squares, New Codyville, AK 01785-0416

Phone: +18698800304764

Job: Senior Farming Developer

Hobby: Paintball, Calligraphy, Hunting, Flying disc, Lapidary, Rafting, Inline skating

Introduction: My name is Trent Wehner, I am a talented, brainy, zealous, light, funny, gleaming, attractive person who loves writing and wants to share my knowledge and understanding with you.