A Wrap on 2023

Twas the night before Christmas, and all through the house, every homeowner and Realtor in Houston is wondering what will happen to the real estate market in 2024.

As we close out 2023, the mortgage rates have shown a good indication that the rates are trending down as interest rates dropped below 7% for the first time in 2 months. There is no way to predict what will happen with interest rates in 2024, but my hunch is that we will finally see interest rates drop below 6% in order to stimulate the economy for an election year.

At the beginning of 2023, financial analysts predicted that the interest rates would drop to under 6% by the third quarter of 2023, but instead they increased to above 7%. This was a result of inflation not getting under control as consumers continued to spend, despite rising costs of almost every commodity, including food.

According to an article in USA Today, “Total household debt rose to an average of $17.06 trillion in the second quarter of 2023, with credit card balances alone reaching a high of $1.03 trillion, according to the Federal Reserve Bank of New York.” Despite inflation, Americans continued to spend, and in another article in CNBC, ““Doom spending” may be one way to cope with stress as economic fears mount, however, it comes at the expense of your financial well-being.”

Despite the average household debt, housing is a commodity, like food, that will never go away—everyone has to have a place to live, whether they lease or own a home. Our job as professional Realtors is to help guide our clients to make the right decision, based on their needs, goals, and financial ability.

The inventory levels remain low into the last quarter, and at this point, we do not anticipate a lot of inventory to come on the market for sale in the middle of the holidays because who really likes to move during the holidays? As I write this blog, inventory levels in the Energy Corridor are 2.5 months supply; in Memorial there is a 2.9 months supply; and in Katy there is a 1.6 months supply. Inventory is down from last month.

The big shift in 2023 is that we saw more rental inventory sit on the market longer as Houston is now being over built with multi family. As you can see all the new apartment construction on Memorial Drive alone, the question will remain, who will fill up all those units of housing? The larger homes with pools continue to lease quickly and there are shortages of higher end rentals, the medium price rental market is becoming more competitive.

Our staff and Realtors are grateful for all of your support and patronage in 2023, and we look forward to assisting everyone in 2024. We wish everyone a Happy Holiday!