The One Thing on Every Realtors’ Holiday Wish List

published Dec 20, 2023
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Ask just about any potential homebuyer what their holiday wish is and it’s likely “lower interest rates in 2024.” 

Real estate agents say they are rooting for rate drops, too, and, overall, a more balanced market with incentives like mortgage rate buy downs and creative seller assistance to help buyers afford homes. The reason? Current conditions have caused the real estate market to stall in 2023. 

With interest rates soaring above 8%, and housing prices increasing in most markets across the United States, first-time homebuyers have been waiting on the sidelines for a more opportune time to buy. As for those looking to move from one house to another? They’re hesitant to trade in their low interest rates for much higher ones. As a result, the National Association of Realtors (NAR) reported that its “Pending Home Sales Index” dropped 1.5% to 71.4 in October, which is the lowest since the index made its debut in 2001. To put it another way: Not a lot of homes are selling.

Brielle Brown, a real estate agent in Erie, Pennsylvania, says she’s hoping for lower interest rates in 2024 because many homeowners who bought during 2020-21 at 3-4% interest rates are concerned with how they’d afford a monthly mortgage payment at today’s higher rate. 

“It’s a valid question to ask: Why sell a home you’re comfortable in with a mortgage at 3% to buy another with a mortgage at 8%?,” Brown says.

It may not sound like a huge variation, but the difference in rates could translate to hundreds (even thousands) of extra dollars in your monthly mortgage payment, which bundles principal and interest. 

Here’s how the math checks out: The median cost of a home in the U.S., according to Zillow, is $346,048. Let’s say you put 10 percent down on a home at that price, and financed the remaining $311,444. A monthly payment on a 30-year fixed rate at 3% interest rate would be $1,313 a month. At 8 percent, though, the monthly payment would jump to $2,285.27.

While it’s hard to know exactly where rates will be in 2024, mortgage experts are currently predicting that they’ll come down a little in 2024. Fannie Mae, the Mortgage Brokers Association, and NAR are all predicting rate drops to the 6 percent range by the end of 2024. 

A more balanced market in 2024 would actually be a good thing for both buyers and sellers, says DJ Soucy, a real estate agent in St. Petersburg, Florida. 

“I believe the odds are high for a more balanced market since lower rates will also entice sellers who may be feeling trapped by their current low interest rate mortgage,” he says. “More inventory will be a welcome relief and help level the playing field.”

To help things even out, sellers may get creative with incentives. For example, seller (or ‘owner’) financing is essentially when the seller acts as the bank to the buyer, explains realtor Lauren Byington, who is licensed in Texas and Missouri. While this route can come with some added paperwork and complexities, it enables people to buy homes who otherwise don’t want to apply for a loan with high interest or who might not qualify for a loan with rates where they’re at today. 

Hopefully, she says, this route helps more individuals buy homes, not just companies scooping them up as investment properties.

“I personally just had a seller say he’d take on an owner-finance situation because he understood how it opened more and new doors,” Byington says. “I think this will become more common and help move the market along.”