Many aspiring first-time buying home in the United States are focusing on 2024 as we approach the fall and winter months. In regard to the approaching year, they have some worries and queries.
What will the housing market look like in 2024? What will the future hold for the real estate market? What details need a first-time buyer to be knowledgeable of before making a purchase?
We may still make some reasonable forecasts based on the current real estate market tendencies, even if it may be more accurate to look backward than forward. Here are some tips on buying a house for the first time in 2024, as well as three crucial considerations.
Low Supply Will Present Challenge for First-time Buyers in 2024
Due to the limited supply of homes on the market in 2024, many first-time homeowners could face difficulties.
Over the past three and a half years, the U.S. real estate market has seen three important modifications or alterations in terms of inventory levels:
- Shift #1: The initial change took place at the onset of the COVID-19 pandemic. The outbreak prompted an unexpected shift in migration patterns and a surge in domestic real estate transactions as people sought to relocate and purchase homes suitable for their remote working needs. This heightened demand resulted in a substantial decrease in the availability of real estate nationwide.
- Shift #2: The second significant development was the downturn of the real estate market in the spring of 2022. The primary factor behind this shift was the uptick in mortgage rates, which subsequently increased the inventory of available properties across the nation. However, this increase in supply coincided with a decreased demand for real estate purchases.
- Shift #3: The most recent shift began in the first quarter of 2023. In January, the supply levels in the real estate market began to decline once more, partly due to the phenomenon now known as the “mortgage rate lock-in effect.” In other words, some homeowners chose not to sell in the hopes of securing the significantly lower mortgage rates available on their current properties.
It’s improbable that the ongoing supply shortage will see significant improvement in the coming months. First-time purchasers may thus have to deal with low inventory levels throughout 2024 in several locations.
Rising Home Prices Could Create a Sense of Urgency
Home prices in the United States have experienced a decline from the record-high levels reached last year. However, it’s becoming evident that this downward trend is now stabilizing and potentially nearing an end.
According to the most recent data from Zillow, the nationwide median home value has increased by approximately 1.2% over the past year. While this growth rate may appear modest and fall below the historical average for annual price appreciation, it signifies a notable shift from the earlier price declines observed earlier this year.
Real estate conditions exhibit considerable variation from one city or state to another. While there are areas in the U.S., such as Austin, Texas, where prices are still in decline, the majority of housing markets across the country appear to be emerging from the post-pandemic downturn.
Zillow’s recent prediction suggests that the median home price in the U.S. is expected to increase by approximately 6% from June 2023 to June 2024. This prediction, though an educated estimate, aligns with economists’ and housing analysts’ expectations for continued home price growth in the coming year, extending from the current year into 2024.
For those wondering how to save money to buy a house, this trend underscores the importance of financial preparedness.
You’ll Probably Have to Compete with Other Buyers
Alongside exerting upward pressure on home prices, the inventory decline discussed earlier has heightened competition among homebuyers. While the market may not be as intensely competitive or heated as it was a couple of years ago, it is evident that the market has picked up its pace since the beginning of 2023.
The first time home buyer tips are to be prepared for stiff competition next year because the supply and demand balance continues to remain unbalanced.
How to Increase Your Chances for Success
For every challenge, there’s a solution. Here are some steps you can take to improve your chances for success when purchasing your first home in 2024, along with essential home buying tips for beginners to guide you through the process.
Get Pre-approved for a Mortgage Loan
In a fast-moving and competitive real estate market, you want to have your financing squared away ahead of time. If you’re like most first-time buyers, you’ll be using a mortgage loan to help finance your purchase. Alongside this, educating yourself with the best books on real estate investing can provide valuable insights and knowledge for a successful homebuying experience.
In that case, you can get pre-approved before you start house hunting. This will assist you in narrowing your housing search to a specific price range while increasing the chance that a seller will accept your offer.
Have a Maximum Budget in Mind
If the real estate market does become more competitive in 2024, you could find yourself competing against other home buyers for the same property. In that case, you’ll want to have a maximum monthly limit in mind for your housing-related costs.
You don’t have to hire a financial planner. All you need to do is examine the amount of money you earn each month after taxes and the amount you spend on all of your recurring expenses. Subtract your non-housing monthly expenses from your gross monthly income. You’ll have a starting point for creating a home-buying budget.
Just leave some financial breathing room for emergencies, retirement savings, and other long-term costs and goals.
Make Your First Offer as Strong as Possible
In a slower market, the negotiation process between the buyer and seller often involves back-and-forth discussions regarding the sale price and other terms of the deal. However, sellers tend to be less inclined to engage in extensive negotiations regarding these particulars in a more competitive market.
After all, they don’t have to negotiate if they have a stack of offers from competing buyers. They can accept the most substantial offer and dismiss the others.
As a first-time buyer, you want to make your first offer as strong as possible. It helps to have a real estate agent on your side. An experienced agent can assist you in deciding a reasonable and attractive offer amount based on recent sales trends in the area. They’ll guide you through the essential steps to buying a house for the first time, ensuring a smoother and more successful homebuying process.
You might not get a second chance to present your offer to the seller. So, make it as strong as possible the first time around. This can increase your chance of getting a home.
Stay tuned for more buying your first home tips and strategies in 2024.