Future Looks Bright!

How close is close enough?

The Fed's target for inflation is 2% on the "core" PCE (Private Consumption Expenditures). At its peak in mid-2022, "core" PCE was running at 5.6% YoY. We've come a long way already. In January 2024, "core" PCE eased to 2.8% YoY (from 2.9% in Dec 2023). And if you annualized the last 8 months, we're running at a 2.2% pace! [BEA] How close do we need to get to 2% before the Fed starts to cut rates?

Four crazy years

Now that we’ve got the Case-Shiller home price data for December 2023, we can zoom out and remind ourselves just how enormous the home price movements have been since the end of 2019. Over the last four years, Case-Shiller's national home price index rose an incredible 47%. And over the last 35 years, the index climbed roughly 5% per year. Talk about a winning record! [S&P Global DJI]

Still above 7%

Average 30-yr mortgage rates stayed above 7% for the third-straight week, and higher rates are already dampening transaction activity. After jumping 9.4% month-over-month in Dec 2023, pending sales (signed contracts) backtracked 4.9% MoM in January 2024. [National Association of Realtors] This suggests that existing home sales for February will drop below 4 million units (annualized) again.

Local Market Trends, As of Friday, March 1, 2024

The 49684 zip code continues to show improvement every week with a slight increase in the median home price to $644,950 and an increase of 1% of active listings up to126. An additional 8 homes came on the market here in the last 5 days and median days on market have gone down 1%, to 37.

In the 49686 zip code, we are seeing a decrease in median home prices, down to $376,000. Twelve new listings came on the market here in the last 5 days, bringing the total number of active listings up to 145. Median days on market have increased slightly, up to 57 days on market. Price decreases with additional days on market, make this a great opportunity for buyers.

49685 remains static with no movement in median home prices at $472,000. Six new listings came on the market here in the last 5 days, bringing the total number of active listings to 72. Similar to the 49684 area, median days on market have decreased to 57 days on market.

Overall, Traverse City remains one of the areas showing the most growth in Michigan.

Local Market Trends (+/-) from Jan. to Mar. 2024.

Year End Recap and 2024 Predictions

After a few years of supply shortages, inventory began to return to more normal levels in the second half of 2023. Demand remained strong and buyers continued to wait for an opportunity to pounce on the best new listings. Nearly half of all fourth quarter sales closed at or above full asking price—in pre-pandemic years, roughly 25 to 30% of sales were at or above full price. Interest rates are expected to ease in 2024 and may drop below 6% by the second half. Continued strong demand combined with increased supply and lower interest rates, should all contribute to additional 2024 sales. Buyers will continue to pay premium prices for the best listings.

Julia Bloxsom-Phelps

Real Estate One -Traverse City/Randolph

License #6501251093

Questions about these articles or the state of your local market? Get in touch! Call me at 616-308-2132 or email me [email protected].

This information is from third-party sources and its accuracy cannot be guaranteed.