Skylar Olsen’s Wish List for the Housing Market in 2024

Overview

The housing market in 2022 experienced steep increases in home prices and mortgage rates, resulting in affordability issues not seen since the 1980s. In light of this challenging scenario, Zillow’s chief economist, Skylar Olsen, has outlined her „wish list” for the housing market in the upcoming year. Her resolutions encompass various aspects such as the lock-in effect, housing shortage, and mortgage rates. While Zillow’s predictions indicate a potential improvement in affordability in 2024, the overall market conditions remain difficult.

Increase in Home Sales

One of Olsen’s top priorities is to encourage more homeowners to sell their properties. The lock-in effect, which occurs when homeowners hold onto their homes due to rising mortgage rates, has reduced the availability of houses for sale and contributed to the continual rise in home values. Although the median sale price in the United States peaked in 2022, it still increased by almost 3% from the previous quarter, disproportionately affecting first-time buyers. However, there is hope as mortgage rates have decreased from their recent high of 8% to 6.77%.

Addressing the Housing Shortage

Olsen emphasizes the crucial role of new construction in resolving the housing shortage. Increasing the housing stock through new construction is viewed as a long-term solution. While recent figures on housing starts provide reasons for optimism, solving the housing crisis requires more than just a surge in construction.

Mortgage Rates Stability

Stability or a gradual descent in mortgage rates is another desire expressed by Olsen. Although the recent drop in rates has stimulated activity, it is improbable that rates will return to the record lows witnessed during the pandemic years. The Federal Reserve’s decision to maintain interest rates unchanged and indicate potential cuts could contribute to a further decline in mortgage rates.

Stable Rent Growth

Olsen’s wish for the rental market is for rent growth to stabilize at the current level of slightly over 3%. The erratic fluctuations in rent growth during the pandemic have made it challenging for renters to find stability and save for a down payment on a home.

A Strong Job Market and Opportunities for First-Time Homebuyers

A strong and stable job market is crucial for achieving a „soft landing” in the economy, and Olsen emphasizes its importance. Additionally, Olsen highlights the need for increased opportunities for first-time homebuyers to build credit and realize homeownership.

In summary, while Zillow’s economists predict a modest improvement in affordability in 2024, with home values expected to decrease by 0.2% and the lock-in effect easing, the overall housing market continues to pose challenges. Nevertheless, Olsen’s resolutions offer hope for positive changes that could alleviate some of these difficulties.

The source of the article is from the blog newyorkpostgazette.com