In a recent update, Zillow has unveiled its comprehensive 2024 national real estate market forecast, predicting critical shifts and challenges. Let's delve deeper into their insights and explore how they align with my opinion of what's happening in Southern Utah's market.
Zillow's projections initially point to an expected decline in home values over the next year, reaching a remarkable 15-year low in home sales, reminiscent of 2008. However, the forecast also reveals a real estate market "poised for change". Zillow's latest insights indicate a significant increase in housing inventory for 2024. Which honestly could come to fruition. In November, Washington County experienced a 25% uptick in inventory, a trend I mention in my monthly newsletters. Economists anticipate that this surge in available homes will not only expand options for prospective buyers nationally but may also offer a modicum of relief in terms of improved affordability. However, the affordability debate remains prominent in Southern Utah, where it's often a struggle for first-time homebuyers to enter the market.
The influence of persistently high mortgage rates emerges as a crucial factor shaping current market dynamics. Homeowners, having secured mortgages during years of historically low rates, appear hesitant to sell, and rightfully so. I often advise my clients against selling homes purchased at 3% or lower interest rates. Strategically managing such investments, possibly with the guidance of a financial advisor, could unveil more advantageous options. Zillow concurs, noting a notable trend of homeowners anticipating a rise in single-family rentals due to affordability challenges. Those who bought during historically low mortgage rates might opt to convert their properties into rentals, contributing to shifts in housing preferences.
This hesitancy among homeowners to sell is likely to contribute to limited growth in housing inventory in Southern Utah. Zillow suggests that unless external economic pressures force sales due to financial hardships, a significant surplus of inventory remains unlikely. This condition, in my view, contradicts their initial statement of declining home prices due to a surplus in inventory over the next year. As I've emphasized, inventory supply is a key determinant of home values, and in Southern Utah, with a demand that consistently outpaces supply, inventory levels hover around 4 months, slightly lower than the ideal balance for a market.
Looking ahead to 2024, Zillow foresees a stabilization of home buying costs, with a potential decrease of mortgage rates to follow suit. Affordability concerns are anticipated to persist, especially in Southern Utah. However, the forecast suggests that home values will hold steady (another contradiction), with a marginal national decrease of 0.2%. My outlook for Southern Utah leans towards optimism, as I believe that with rates settling around the anticipated new norm of 5.5% - 6.5% over the next year, buyers in a position to make a purchase will likely do so. If demand remains high and supply stays low, home prices could experience an upward trajectory, although I admit it would be fairly minimal. It's essential to consider the unique dynamics of the Southern Utah market, where an influx of residents from other states, particularly the East Coast, continues. St. George, for numerous reasons, remains an attractive option for many seeking a change in location.
In conclusion, Zillow's 2024 national real estate market forecast reveals a nuanced landscape, forecasting shifts and challenges. Southern Utah's market, influenced by high mortgage rates and homeowner hesitancy, presents a unique dynamic. Despite the national projection of a marginal decrease, my bullish outlook for Southern Utah is grounded in its resilience, attraction to newcomers, and the potential impact of settling mortgage rates. In the upcoming year, staying attuned to local nuances will be pivotal for informed decision-making in this ever-evolving real estate landscape.
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