Article published in Northampton Living
(February 2024)
Let’s start with the good news. Lawrence Yun, chief economist of the National Association of Realtors, forecasts that existing home sales will rise by 13.5% and mortgage rates will be in the 6% range in the Spring 2024 market. This will hopefully thaw our market a bit, bringing more housing options to hopeful homeowners. Yun also predicts that we will be in a seller’s market as long as inventory is low, which seems likely to remain the case in Massachusetts, where exacting building codes contribute to the high cost of new construction.
Now a look back at 2023:
Mortgage Rates
As the Federal Reserve continued its campaign to raise interest rates in 2023 – enacting four hikes over the year – mortgage rates followed. Starting at about 6.5% to open the year, the average mortgage rose almost 1.5 percentage points, peaking in October (a two-decade high at around 8%). Recently, the Fed signaled that it will start lowering interest rates in 2024, leading to a drop in home mortgage rates to 6.83%, the lowest rate since June.
Inventory
Inventory across the Commonwealth was down by about 30% in 2023. And that is on top of 2022's inventory, which was already down over 10% from the previous year. Homeowners who want to move, but don’t want to give up their 3% down mortgages, are staying put. Others cannot afford to move, and still others cannot find what they are looking for, creating a viscous cycle of low inventory.
Buyer Demand
Demand for single-family homes and condos continued to persist despite interest rate and inventory challenges. The average price of a single-family home in the Valley is up by single digits.
Inspiration for First-Time Homebuyers
In 2023 I helped 12 buyers and 5 sellers.
Of those 12 buyers:
70% financed
80% werefirst-time homebuyers
This is particularly extraordinary because per the National Association of Realtors, only 26% of all home buyers are first-time home buyers.
If you are a buyer, or you know a buyer, who is hesitant about this market, I’m here to help. Contact me at 413-923-2344 or ruthieoland@kw.com.
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