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Will mortgage rates decrease? A 2024 housing market outlook

What we'll cover

  • Challenges homebuyers and sellers are facing

  • How the "lock-in effect" impacts available homes

  • Why buyers may have a slight advantage

In 2023, the housing market experienced historically high mortgage rates and home prices. How will those factors affect homebuying and selling in 2024?

Ally Home President Glenn Brunker shared his thoughts on what could be ahead for both sellers and buyers.

How can homebuyers prepare?

The good news? I believe mortgage rates should start to decrease. The bad news is it's likely going to happen gradually over the next several months. Because of that, the housing market will remain slow, with less inventory, through the beginning of spring.

Mortgage applications haven't been at levels as low as they are right now since 1995. Buyers are facing issues of affordability, decreased inventory and homeowners who are not selling because of high rates. None of this is going to change overnight.

I recommend you don't wait until rates are lower.

Will there be more homes available in 2024?

With mortgage rates still high, potential sellers who could have lower rates on their mortgages are less likely to put their home on the market. Sometimes referred to as a lock-in effect, this trend could be with us until at least the middle of 2024. We are seeing a continued ramp-up in the number of new homes being built, but it's still not enough to make up for the inventory shortage.

Should homebuyers wait for lower rates?

I recommend you don't wait until rates are lower. Even if you have all the data, it's impossible to predict with any level of certainty what is going to happen. If you can qualify for a home loan and comfortably afford your mortgage payment, it could mean it's a good time to buy.

You gain no advantage by waiting. Think of it this way: If you're considering buying a $300,000 house but wait a year until rates are lower, that same house could then cost around $30,000 more. Alternatively, you could buy the house at $300,000 now with the current mortgage rate and refinance your mortgage loan later on to reduce your rate.

Will 2024 be a buyer's market or a seller's market?

Right now, it doesn't look like it will be either. The market has tipped slightly in favor of buyers with homes selling in about four to seven weeks (compared to when homes were selling in less than a month in 2022). Even so, buyers should be ready to move quickly when the opportunity is right. I recommend getting a verified pre-approval letter (VPAL) to help you make a strong, qualified offer when you find the house you want.

If you haven't found that house yet, ComeHome could be a great place to start. The platform can help you build your homebuying confidence with useful insights about your future home, like price and neighborhood data. Current homeowners can claim their house to unlock information, such as estimated equity and ideas to boost value.

Find your future home

The temptation to wait for the perfect mortgage rate will always be there, but don't give it too much power in your journey to homeownership. As we embrace 2024, instead of focusing too much on the market, turn your attention to what's right for you, your finances, your family and your future home.

Glenn Brunker is president of Ally Home, responsible for leading the growth of the company's mortgage business. He has oversight of the direct originations and bulk acquisition businesses as well as responsibility for the servicing platform. He also leads the secondary marketing and business line risk functions.

Glenn has extensive executive experience in leading banking operations, secondary marketing, production channels and all key risk functions. Before joining Ally in 2018, he held leadership roles in financial services at Bank of Oklahoma Mortgage, Fifth Third Bank, National City Bank and Oak Street Mortgage.

Glenn is a native of Chicago, and has a bachelor's degree from Northern Illinois University and an MBA from DePaul University. He currently lives in Charlotte, North Carolina.

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