After a whirlwind of a year for the real estate industry, Zillow Chief Economist Skylar Olsen recently shared her 2024 housing market “resolutions.” Indeed, Olsen is hoping the new year will kickstart a rebalancing process for housing, which has long been marred by economic shortcomings.
With mortgage rates expected to finally start coming down as the Federal Reserve hints at rate cuts, housing may finally be released from its state of near gridlock.
So, what exactly does Olsen hope to see from the real estate market in 2024? Let’s take a look at six hopes and predictions for 2024.
Zillow’s 6 Housing Market Resolutions for 2024
1. More homeowners will decide to sell.
Olsen’s first resolution for the new year is an obvious one. Indeed, Olsen hopes that 2024 will finally see some progress in the inventory crunch present in housing over the past several years. For that to happen, new listings need to start flooding the industry. Falling mortgage rates will hopefully facilitate this. In that regard, Olsen already sees early evidence that sellers are starting to test the waters as rates begin to ease down.
2. Home construction will continue to ramp up.
One of the other primary methods of reducing the housing supply pinch is for an influx of newly constructed homes to hit the market. Homebuilders are crucial in this way, as the housing shortage demands more properties in rotation. Once again, things are already looking positive heading into the new year.
3. Mortgage rates will make a slow descent.
Olsen is also hopeful that mortgage rates will ease through the year or at least prove less volatile than they have been over the past several years. Indeed, mortgage rates have been on a semi-constant rollercoaster since the Fed started raising rates in 2022. With rate cuts on the way, the 30-year may ease to even sub-6%, though Olsen notes it is unlikely that rates will fall back to 3% pre-pandemic levels.
4. Rent growth will stabilize.
The Zillow chief economist has kept a close eye on rent growth over the past several years. After pandemic-induced volatility in the space, Olsen is hoping rent inches up at a more predictable rate. Reduced volatility would also help the Fed’s inflation battle.
“Rent growth was also a major contributor to inflation. This more balanced, sustainable path for rent growth will do more than help renters save for a down payment or another life milestone — it would strengthen the Fed’s case to loosen monetary policy and cut interest rates,” Olsen notes.
5. Strength in the labor market will continue.
For many reasons, it’s also important that the job market remains as resilient as it has over the past two years. Indeed, even as the central bank raised rates, unemployment has managed to stay under 4%, with job growth remaining positive. While job growth will likely continue to slow in 2024, housing affordability and household financials depend on jobs remaining strong even under pressure.
6. More way for new buyers to build credit will emerge.
Olsen’s final resolution for housing comes as a plea for the new homebuyers entering the market. Indeed, Olsen cites Zillow’s research showing the importance of credit access and credit scores in the housing market. In that regard, improving access to credit and making building credit a more straightforward process remains of utmost importance for real estate in the new year.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
