As we step into the new year, the looming question is, 'What will the market look like this year?' While the future remains uncertain, our analysis of available data provides some insights.
Since 2022, we have observed a surge in interest rates, reaching a peak in October 2023 with the average 30-year fixed mortgage rate being 7.79%. This two-decade peak had a profound impact, leading to a 19.3% drop in transactions in the Denver Metro market from July 2023 (before rates hit 7%) to October 2023. Buyers faced challenges with elevated monthly payments, and sellers hesitated due to fears of reduced demand.
Despite these hurdles, hope emerges on the horizon! According to Jeff Cox's CNBC article, committee members anticipate three rate cuts in 2024, each in quarter-percentage-point increments. Currently, the 30-year fixed mortgage rate stands at 6.354% with no points, suggesting a potential decrease to 5.6% or lower by the year's end. A shift to rates in the 5% range could reinvigorate the market, enticing sidelined buyers with more affordable monthly payments and providing sellers with greater confidence to transition to a new home.
In summary, 2024 is expected to bring significant changes compared to 2023, moving in a positive direction. If you have any questions, comments, or concerns, feel free to reach out to me; I would be happy to talk!
Sources
Data is taken from REcolorado covering single family residences including Adams, Arapahoe,
Broomfield, Denver, Douglas, Elbert, and Jefferson Counties.
