Over the past five years, the Houston metro housing market has been basically on fire. Spring Break already fast approaching, people looking to buy a new home will once again hit the streets in search of a good deal.
Whatever their housing needs may be, many potential home buyers have been hesitant. As Houston real estate prices have soared over the past several years, this is understandable. However, the Houston market is expected to flatten out next year, providing a chance for more buyers to catch up.
Adam Perdue, a research economist at the Texas Real Estate Research Center, said the center is expecting the housing market to slow over the next year and prices to decrease. In the Houston area between 2020-21, there was a 21% increase in home prices when typically there is a 5% increase over a two-year span, according to Perdue.
“We expect to see [prices] fall back much closer to that 5% or even fall below it. We are expecting to continue to see it be a positive [increase] but slower than what we have seen over the past two years,” he said.
More than Just Price
In addition to high prices, the other challenge for potential homebuyers has been extremely high mortgage rates, now ranging from 6.5 to 7.5 percent. 2024 shows promise on that front, as well:
The experts say they expect mortgage rates to drop slightly by about a half a percentage point. In December, the Federal Reserve held its final meeting of 2023-- choosing to leave interest rates alone-- and signaled that it’s officially finished raising interest rates in its efforts to fight inflation. There are even indications they could cut interest rates three times in 2024.
This decision suggests the Fed’s benchmark rate is likely to peak at a 22-year high of 5.25-5.5 percent.
Rates have been rising at a breakneck pace since March 2022,
with the Fed taking their key federal funds rate from a historically-low level
of near-zero to its current target range in just 16 months. This has been the
fastest-paced series of rate hikes since the 1980s, aimed at relieving the
worst inflation in generations.
