The U.S. housing market is expected to rise in 8 out of 10 years! Is it a good time to buy? Expert says YES! Let's delve into his insights and explore what it means for you. The housing market has been on a bit of a rollercoaster ride lately.
While some worry the dream of homeownership is fading, industry leader Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), offers a positive outlook for the next decade.
According to Yun's forecast presented at the “Residential Economic Issues & Trends Forum” during NAR's 2024 REALTORS® Legislative Meetings, the trajectory suggests a notable uptick in existing-home sales in the coming years.
Housing Market Will Gain in Eight of the Next 10 Years
Positive Trends and Forecasts
Yun anticipates a 9% increase in existing-home sales in 2024, rising to 4.46 million from the previous year's 4.09 million. Looking ahead to 2025, the momentum is expected to accelerate further, with a projected 13.2% surge to 5.05 million sales. What's more, this growth trajectory extends into the foreseeable future, with anticipated gains in eight out of the next 10 years.
This positive shift is attributed to several factors, including:
- Falling Interest Rates: Yun anticipates a decrease in interest rates in the long run. While current rates may seem high compared to recent years, he believes they will become more favorable, easing the financial burden on homebuyers. This trend, coupled with a stabilization of rents, is poised to have a positive impact on the consumer price index (CPI) and could prompt the Federal Reserve to implement rate cuts.
- A Strong Job Market: Yun highlights the robust job market as a key driver of housing demand. With six million more jobs compared to pre-pandemic levels, more Americans have the financial stability to pursue homeownership.
- Building Wealth Through Homeownership: Yun emphasizes the wealth-building potential of homeownership. Statistics show a significant difference in net worth between homeowners and renters. Buying a home, even with slightly higher interest rates, can be a strategic investment for long-term financial security. Citing data from 2022, he revealed that the median net worth of homeowners stood at $396,200, in stark contrast to renters' median net worth of only $10,400. This stark contrast underscores the long-term financial benefits of homeownership.
- Dream of homeownership: Yun also addressed concerns about the dream of homeownership in contemporary society. Despite challenges such as high mortgage rates, he remains optimistic, asserting that homeownership remains a viable pathway to wealth accumulation. He stressed the importance of real estate professionals in guiding individuals toward this goal, highlighting the significance of referrals and client satisfaction.
Challenges and Advocacy
However, Yun acknowledged the challenges posed by housing inventory, noting that not all demand is being met due to a lack of supply. To address this issue, he discussed the need for advocacy policies aimed at stimulating supply and addressing affordability concerns.
Another factor impacting the market dynamics is mortgage rates. Despite expectations for rate cuts, Yun pointed out that the Federal Reserve has delayed such actions, potentially impacting first-time homebuyers. The resulting increase in monthly payments underscores the importance of monitoring interest rate fluctuations for both buyers and sellers.
Government Spending and Economic Outlook
Yun also raised questions about the impact of government deficits on rising rates. He expressed concerns about the magnitude of government spending, particularly in light of a recovering economy. The lingering effects of the pandemic have prompted significant fiscal measures, raising questions about inflation and its implications for real estate investments.
While navigating the current housing market may require patience and a strategic approach, this forecast offers promising news for aspiring homeowners. With a strong job market, falling interest rates on the horizon, and the wealth-building advantages of homeownership, the American dream remains very much alive. If you're considering buying a home, consult a qualified real estate agent to discuss your options and develop a plan to achieve your dream of homeownership.
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