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A “return to seasonality” has been a buzzy term over the past few years. Will we return to the days when springtime equated with more homes coming to market while more buyers are looking to purchase? Or will the analysis paralysis that has defined much of the past two years continue?
The current headwinds we’re experiencing have never happened before, and knowing how such unique macro circumstances will play out is impossible.
Just like the trajectory of interest rates and what it means for the housing market in 2024, no one has a crystal ball. Yet every time mortgage rates dropped this year, there was an uptick in applications, and buyers flooded my market across all price points. And this is happening across the country.
Pent-up demand
The pent-up demand remains, and I believe it means that when more sellers get comfortable, we’ll see quick absorption. That means the spring market will stay tight because demand continues to outpace supply. The overarching theme across the board has been uncertainty, which stalls markets. As the New York Times said this summer, “Housing hates uncertainty.” More certainty will come as time passes and people become comfortable with the new rate environment.
Like the weather, I believe the spring market will thaw, and an increasing sense of security will come back for many people who’ve been spooked. The spring market is generally a time of more inventory, and people start to think about their life plans.
Life wins
Life is the force that will define early 2024. Life goes on. Life keeps people moving as they enter new chapters. Whether that is increasing their footprint, downsizing or relocating for jobs, people have been halting their plans to truly move from one stage of their life to the next. I think we’ve reached a tipping point.
Financially-minded buyers have been in limbo, allowing interest rates to sideline them as they seek out “deals” and wait for prices to fall, which hasn’t happened substantially. According to Zillow prices are currently 40 percent higher compared to February 2020.
In the third quarter of 2023, NAR reported that home prices grew in more than 80 percent of U.S. metro areas yearly. Meanwhile, more emotional types have been dreaming of what’s next for them and their families, with lifestyle paramount. The inability to make predictions took people out of the market.
We are heading into a time of restabilization and that means the spring market will mean more inventory and more choice. Declines in mortgage rates will drive more sellers to trade their existing homes and help add much-needed inventory to the market, leading to more transactions.
As agents, we must approach the spring market with enthusiasm, preparation and adaptability, and be ready to navigate every opportunity for our clients.
Wrapping up
From high pricing to low inventory, it still feels like the factors affecting the housing market are more in flux than at any recent time in history. Agents arguably have a more critical role to play than ever in helping clients buy and sell homes this coming year.
Staying informed with data, marketing and the hyper-local conditions of your market will be the best way to create value for clients this spring.
Diana Sutherlin is team lead and luxury division broker for The Sutherlin Group at Compass in Jersey City, New Jersey. Connect with her on Instagram.
