By Maddie McGay
As 2023 comes to a close, local and national housing market forecasts for the new year are beginning to surface. While predictions do not call for drastic market changes they may give more confidence to homebuyers looking to buy their first home.
"I'm extremely excited about next year's market," said Rob Norman, eastern region president of Coldwell Banker Realty, based in New Jersey. "We're coming out of what would be a very restricted market. It was tight on inventory, interest rates were creeping up. There was a little bit of uncertainty with what was going on, so the market felt tense and there were people sitting on the sidelines waiting it out. I feel like we're beyond that initial cooling period."
Realtor.com released its 2024 national housing market predictions last week, forecasting more affordable home prices and more stable mortgage rates, but a decline in housing inventory across the country.
What are Realtor.com's predictions for North Jersey?
The real estate website compiled a list of the largest 100 metropolitan areas, ranking them by their summed expected sale and price growth rates in 2024.
The New York metropolitan area − which covers North Jersey − placed 75th. The site predicts the region will see a 10.8% decrease in home sales and a 3% increase in sale prices during 2024.
How North Jersey realtors are predicting the 2024 market
MORTGAGE RATES — Mortgage rates have remained high through the entirety of the year, but North Jersey realtors expect them to remain lower in 2024 than the peak rates of more than 8% we saw in 2023.
"I definitely feel like rates are going to come down. I wouldn't say a lot, maybe to 6% or 6.5%. But, I don't think we're ever going to see 3% rates again," said Betti Russo, a broker sales associate with Keller Williams Prosperity Realty in Wayne and Oakland. "I think as soon as the rates come down a little bit, the market is going to explode again."
Max Stokes, a partner of the Fox & Stokes team at Compass Real Estate, said that while the Federal Reserve has taken a pause on raising mortgage rates, they are still going to remain elevated.
"It's deeply affecting the market now, and I think it's going to affect the market in 2024 as well, because I don't see the rates dropping considerably," he said.
Norman said that while he also foresees the rates remaining at their current high rates, he doesn't see them climbing much higher in 2024. He added that they should remain fairly stable, giving potential homebuyers more confidence because they'll know what to expect.
"I think we've seen favorable changes in the interest rates, where we've seen them trickle down a little bit, especially over the last couple of weeks," Norman said. "I think we're starting to see some leveling off, and I think it's encouraging to find out that we're reaching a new normal."
If you are waiting for more inventory to hit North Jersey's housing market in 2024, you might be disappointed: Overall, inventory isn't expected to change much into the new year.
"I anticipate, along with places like the National Association of Realtors, that inventory will still be restricted a little bit," Norman said. "I don't think we're going to see a flood of inventory coming on."
Russo said that because many people are locked into their low mortgage rates − think 2.5% or 3% − this lack of inventory most likely won't change anytime soon because homeowners don't want to lose their rates if they don't need to.
For individuals who do need to move due to circumstances and don't need the equity from their current home with a low rate, Stokes said, they're often choosing to turn their home into a rental.
"Rental prices are so elevated, and they have a low mortgage rate due to previous low-interest rates," he said. "So, you're seeing a lot of people choosing to keep their house as a rental, rather than selling and putting their money into the stock market. And, you'll most likely continue to see it into the new year."
Affordability in North Jersey is expected to remain poor into the new year, Stokes said, but home prices are not necessarily expected to drastically increase either.
"Affordability will start to become less of a question," Norman said. "It'll start to stabilize to where the home prices are going to be, and we'll start to see a little bit of calmness in the market and people going back to buying and selling."
Russo said that because home prices will likely remain where they are, potential homebuyers should consider entering the market sooner rather than later. She added that while waiting for rates to change, prices may go up, so homebuyers will end up losing money in the long run.
Overall, while each realtor doesn't anticipate the market in North Jersey to change much in 2024, they believe it's going to be less unpredictable.
"I don't think we're going to be as shocked or surprised by what's going on in the market next year, perhaps as we were in the past," Norman said.