Realtors Agree the Housing Market Will Improve in 2024

WHITE PLAINS—While the Federal Reserve continues to say the battle against inflation is not over, the specter of interest rates rising above 8% again appears highly unlikely going forward. Entering 2024, economic pundits and even the Federal Reserve are no longer in disagreement on whether rate cuts are appropriate, their only conflict is how many will take place in 2024 and beyond.

As recently as November, the average 30-year-mortgage interest rate shot up to nearly 7.8%, but thanks to positive inflation and employment data, rates for the first time since August, have fallen below 7%, hitting 6.95% for the week ended Dec. 14. That brought the monthly mortgage payment for a home priced at $400,000 to $2,118, down from a yearly recent high this autumn of 7.79%. The lower rate yields monthly savings of $183 and $2,196 annually for the same $400,000 home, according to the National Association of Realtors.

Will this lower rate environment with the prospect of multiple rate cuts provide a spark to what has been a troubled residential sales market in 2023?

Real Estate In-Depth asked a number of prominent Realtors in the region their thoughts on what they expect the market will look like this spring and beyond in the New York metro region. While they differed on the extent of the improvement, all expect some aspects of the residential real estate market in the Hudson Gateway Association of Realtors market area to improve in 2024.

2023 HGAR President Tony D’Anzica, JD, CIPS, AHWD, who is Broker-Owner of Dynamax Realty NYC Inc. of New York City, said that going forward, “I see the market stabilizing a little bit. I do agree (with analysts) that the (recent) Consumer Price Index report was positive, but the way the Fed has been acting for the past year, year-and-a-half they have been aggressive and maybe overly cautious. I don’t see that changing.”

D'Anzica predicted that the Federal Reserve will not cut rates in the next six months, but in the interim he does expect interest rates and the overall housing market to stabilize. He added that in the short term, he does not expect any large increases in inventory, which will continue to put upward pressure on prices. He said that while rates will be lower, those rates may not prompt those with 3%-4% mortgages to put their homes on the market and finance a new purchase at higher rates. Other potential headwinds for the market and the U.S. economy could come from the ongoing conflicts in Ukraine and Gaza.

“I am a little bit pessimistic over the next six months,” D’Anzica said. “I don’t see the market improving dramatically in a way that is going to impact anybody, really for the better. I think mortgage rates will ease up a little bit, but that is the best we can really hope for.”

2023 HGAR President-elect Carmen Bauman, Principal Broker of Green Grass Real Estate of Bronxville, said, “I think the residential market will still have an inventory lag, probably for the first two, if not three quarters. Hopefully, with the (positive) economic predictions, at that point, if interest rates dip a little bit by a basis point or a basis point and a half, then inventory should come back up. I think people are tired of waiting at this point.”

Bauman, who is also an Associate Broker at commercial real estate brokerage firm RM Friedland, said, “I think the office market is still in the pits. It is a problem and that is why we are seeing repurposing… like the Galleria (at White Plains) project and I think you are going to see more of that.”

She related that the retail market has gotten stronger and Bauman, who will serve as HGAR’s 2024 President beginning in January, said she was most bullish on the prospects of the retail sector than any other commercial real estate segment in 2024. While the industrial market appears to have plateaued, she noted that the multifamily segment will also continue to perform well in the coming year.

In terms of the new apartment development in New Rochelle, Yonkers, Mount Vernon and White Plains, Bauman said that most of the new product that has hit the market has been absorbed and there continues to be strong demand for multifamily developments in the northern suburban pipeline.

Joseph Rand, Managing Partner and Chief Creative Officer of Howard Hanna | Rand Realty said he thinks that “2024 will be a strange market that will look like a buyer’s market in some ways and a seller’s market in others. We’ll see prices stabilize and maybe go down a bit, which is what happens in a buyer’s market. But in most buyer’s markets, sales go down, which I don’t think will happen. Instead, I think sales will go up from their current levels, simply because we’ll finally see an increase in inventory from sellers who are coming off the sidelines.”

He believes the lower rates will be the key factor in prompting some homeowners to finally get off the fence and put their homes on the market for sale.

For the past two years, too many potential sellers have sat on the sidelines because they didn’t want to give up their ridiculously low interest rate on their home mortgage,” Rand said. “As rates go down, though, a lot of those sellers will finally get into the market, which will increase inventory and probably drive up sales a bit. But that increase in inventory will probably put some pressure on prices, which will likely stabilize and could even go down a bit.”

HGAR Past President Anthony Domathoti AHWD, CRS, C2EX, SRS, CIPS, ABR, predicts that with the new year, home sellers will return to the market, mortgage interest rates will stabilize by the second half of the year, the number of home buyers will increase and home prices will continue to rise.

Domathoti, Broker-Owner of Exit Realty Premium in the Bronx, said, “In looking ahead to 2024, the real estate landscape appears poised to favor sellers over buyers. The current trend of more buyer inquiries than seller listings suggest a promising time for those selling their homes, while potential challenges await buyers.”

He said that one significant shift in 2023 was that traditional 20% down payment with 80% financing might no longer suffice to secure a bid. He related that unless there's a considerable drop in interest rates, this trend is likely to persist through 2024.

“Entering an election year, which historically entails added risks, the fundamental necessity for housing remains unchanged. Foreclosed properties entering the market, albeit requiring renovation, might introduce a balancing factor. Investors buying, renovating, and reselling these homes could alleviate some market pressures,” he said.

He concluded, “As sellers adapt to elevated mortgage rates, it's probable that asking prices will adjust downwards in 2024. A beneficiary of higher rates might be new developments, especially amenity-rich condos, which will likely attract buyers seeking move-in ready homes due to limited resale options and high renovation costs.”