Challenging US Housing Market Provides Creative Options to Consider in 2024

By: Get News

With interest rates at a 20 year high and home affordability among the worst in US history for buyers, the climate is not looking any easier for 2024. The pandemic created a surge in home prices which coupled with the Fed’s rapid rate hikes has led to an environment few housing experts have seen.

According to Josh Cohen, CEO of 3 Step Home Sale, "It's a very challenging real estate  market for buyers and sellers alike. Most sellers are not in a position to sell because they would be trading in a sub 4% interest rate on their current home for a new home at a much higher price and a 7 to 8% mortgage rate. This increases their payments anywhere from 30-50% or more. Few are willing or able to do that." 

What the US housing market will look like in 2024 has been heavily debated. The inability for most sellers to trade their homes for an affordable new home has created a supply crunch that continues despite reduced demand from buyers. Most institutional and hedge funds exited as buyers in early 2023. "For sellers and buyers to be successful in this environment, both parties need to be open to creative options. Creativity and outside the box thinking is the road ahead for the US housing market through 2025." continues Cohen.

Different ways of handling home sales, such as taking over a seller’s existing VA loan also known as a loan assumption, are becoming more and more popular. VA loans allow home buyers who will live in a property as a primary residence and meet all the requirements of the VA to assume the current loan of a seller with a low interest rate mortgage. The seller gets their price and the buyer gets an advantageous mortgage interest rate.

Another option which works well often for investors selling properties in the current climate is owner financing. With increased expenses on properties due to inflation as well as higher interest rates, most properties will not cash flow at today’s sales prices with today’s mortgage rates. Homeowners who have equity can get their price and still make a deal with a buyer by providing owner financing or some combination of owner finance or creative financing. This involves the seller of a property acting as the lender, offering a different way for buyers to finance their purchase and bridge the gap between high prices and high interest rates. 

Until either interest rates or home prices give or wage growth catches up, private capital entering the housing market will remain in short supply. Cohen notes: “It’s hard to persuade investors to move their money from safe, high-return options like U.S. Treasury bonds, which are currently yielding around 6% unless the investment in a risky climate offers a much higher reward vs risk.”

According to Cohen, overall a tight supply of homes with an even tighter supply of qualified buyers will remain through 2025. Deals will get done by those who are willing to concede on either price or terms or both. 

Media Contact
Company Name: 3StepHomeSale's
Contact Person: Nicole Mitchell
Email: Send Email
Country: United States

Data & News supplied by
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.