Zillow Forecasts Improved Buyer Outlook for 2024

The housing market’s volatility in recent years has made buying a home increasingly unaffordable for many. Zillow’s latest report highlights a 20-year high in mortgage interest rates, but there’s a glimmer of hope for prospective buyers in 2024. Anticipated increased housing inventory, reduced home prices, and broader rental options might alleviate the financial strain.

Skylar Olsen, Zillow’s chief economist, anticipates a gradual market recovery next year, offering better prospects for buyers due to improved affordability and increased housing choices. While renting remains a popular option, Olsen predicts a balance in rent growth and concessions owing to strong single-family rental demand and recent property additions.

Zillow’s data spotlighted an alarming trend where the typical October 2023 homebuyer allocated a staggering 40% of their income towards mortgage payments, marking a historic high reminiscent of the ’90s.

Despite persisting affordability concerns, 2024 might witness a slight easing of these challenges. While mortgage rates are expected to maintain their stance for some months, a potential dip could make home purchasing more feasible, granting individuals the necessary monthly budget for mortgage payments.

The advent of AI technologies, long employed by Zillow for its “Zestimate” feature, is anticipated to revolutionize the home buying experience in 2024. AI tools are poised to transform how listings are created, improve buyer-seller interactions, and shape the home shopping landscape.

Though 2024 could see improvements in home affordability, many may still face pricing barriers. As the median renter’s age rises and preferences shift, the demand for specific rental properties is set to change.

With homeowners opting to convert their residences into rental investments instead of selling due to favorable mortgage rates, the single-family rental trend is expected to escalate. The market will likely witness increased home flipping opportunities and heightened competition among buyers and flippers.

Shifting demand from suburban to urban rentals, following the pandemic exodus, marks a key trend, with downtown areas experiencing renewed interest. Subsequently, landlords in urban zones are enticing renters with concessions to drive occupancy, signaling a nuanced rental market shift post-pandemic.