National Real Estate Insights - January 2024

Interest rates have plunged since October, and are currently expected to drop further in 2024. Inflation is a huge factor in interest rates, consumer confidence, and housing and financial markets. Most analysts believe inflation will continue to fall in 2024. Consensus opinion is that the Fed will soon begin to drop its benchmark rate. Once it determines a change is appropriate, the Fed often acts quickly and decisively. Rarely have stock markets swung so dramatically from pessimism regarding economic trends to ebullient optimism as in the last 2 months of 2023. The effect of high interest rates on the number of new listings coming on market has had a staggering impact on supply & demand dynamics. Even as rising interest rates negatively affected affordability, the extremely low supply of homes for sale has maintained upward pressure on home prices. Home sales plunged in 2023, but if economic conditions continue to improve as currently forecast, both supply and demand should rise in 2024. Monthly accepted-offer activity, seen below, highlights the effects of market seasonality. Activity usually picks up rapidly in the 1st quarter to peak in spring. A long-term illustration of national median house sales prices - which defying expectations, saw a strong recovery in 2023 after the mid-2022 plunge. Perhaps due to their relative affordability, median prices of condos and co-ops rebounded even more than house prices to hit a new high last year. Across all national regions, there has been very substantial home price appreciation over the past 5 years. Speed of sale is mostly determined by the intensity of buyer demand as compared to supply. Median days on market remain very low by long-term standards. As interest rates rose, so did the percentage of all-cash buyers - who have played an increasing role in supporting demand and home prices. One of the biggest factors behind demand is population change, especially migration, which has been a particularly important issue since the pandemic. The rate of new home construction is a critical dynamic in both the supply of homes for sale and housing affordability. It varies widely by state.

Please let me know if I can ever be of assistance to you or to your family, friends and colleagues. Wishing you and yours a safe, happy, healthy and prosperous 2024!

Lorena Bensching Broker M: 360.520.7676 lorena.bensching@compass.com

National and regional statistics are generalities, essentially summaries generated by thousands of unique, individual listings and sales occurring across different market segments. They are best seen not as precise measurements, but as broad, comparative indicators with reasonable margins of error. Anomalous fluctuations in statistics are not uncommon, and last period data should be considered preliminary estimates which may be revised in future updates. Different analytics programs sometimes define standard statistics differently - such as "active listings," "days on market," and "months supply of inventory": What is most meaningful are not specific numeric calculations but the trends they illustrate. Data from sources deemed reliable, but may contain errors, and subject to revision. All numbers to be considered approximate, and how these analyses apply to any particular property is unknown without a specific comparative market analysis. Compass is a licensed real estate broker. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.

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