Homes under construction at Saddlebrook Farms North in 2024. Several new homes are scheduled to be built in 2024.
Daily Journal file photo
Johnson County real estate agents expect housing inventory to remain low even though mortgage rates will be regulated this year following a sharp rise in mortgage rates in 2023.
In 2023, real estate agents worked with many clients who were concerned about interest rates and were struggling to find the type of home they wanted to buy on the market.
Talk To Tucker Realtors' year-over-year analysis for December reveals:
- Pending home sales decreased by 7.5% compared to December 2022.
- Available housing inventory increased by 4.5% compared to the same period.
- The average sale price of a home increased 2.8% to an average of $339,308.
The data shows this is not only seen in their experience, but also across the wider region.
The MIBOR Association of Realtors revealed that the number of pending home sales across central Indiana increased by 0.6% year-over-year, while the total number of active listings decreased by 41.9% year-over-year. In December, there was an estimated 1.4 months' worth of inventory on the market across the region, which is extremely low.
The Daily Journal asked local experts to reflect on Johnson County's residential real estate market and offer insights and predictions for the coming year.
Interest level
According to the Associated Press, 2023 was the weakest year for U.S. home sales in nearly 30 years. The main reasons are rising mortgage rates and inventory shortages.
During the COVID-19 pandemic, federal authorities have slashed mortgage interest rates to about 3%. But Angie Garrard of Talk to Tucker Realtors said prices began to rise sharply in 2022. He called rate hikes “a matter of perception” and said what was actually happening now was that interest rates were returning to normal.
“Our high mortgage rates remain average and in some cases historically low,” Garrard said. “When I bought my house in 1998, the interest rate was 7.75, which was about the same as last year's interest rate. That's not high. It's high compared to the interest rates of the past few years.”
Ron Rose, a real estate broker with Indiana Realty Pros, said some interest rates are expected to average around 6.5% through 2024, which Rose argues is an affordable rate for buyers. ing.
“We just went through a period where interest rates were extremely low, and people got used to the idea that a 3% monthly mortgage was a decent payment,” Rose said. “If you look at history over the past 20 years, 5.5 to 6.5 percent is pretty normal.”
The current interest rate in January is about 6.7% for a 30-year mortgage. Expert opinion across the country is mixed, but several banking groups predict mortgage rates will fall to 6% by the end of the year.
As mortgage rates fall, more buyers are expected to enter the housing market. Mr Garrard advised potential buyers to start the home buying process now rather than waiting until interest rates come down. If they wait, she says, there will be more competition for properties on the market.
housing stock
Interest rates are expected to be regulated in 2024, but low housing inventory is a focus for real estate agents.
Total existing home sales in the U.S. were $4.09 million, down 18.7% from 2022, according to the National Association of Realtors.
In 2023, Garrard saw an increase in people entering the housing market with a limited number of units. As a result, market values have increased, but fewer homes have been sold.
The issue of limited housing inventory began to emerge after the housing market crash, and while many home builders are building aggressively in Johnson County and around the state, deficits still exist, Garrard said. Stated.
“Contractors have been building for the last few years, but we're still behind the curve,” Garrard said. “We don't have as many homes as there are buyers. Even though the market is somewhat balanced, homes aren't necessarily flying off the shelves like they were two years ago or early last year. It's still a seller's market. is.”
Today, homes typically stay on the market for about 30 days before selling. Garard predicts there will be little increase in inventory, with roughly the same amount of units available by the end of 2024.
Rose also noticed a decline in the number of homes listed, especially in Johnson County. But he doesn't think of the market as a “seller's market” like Garrard does. Rather, he sees the current market as “balanced.”
“We've entered a normal market where buyers and sellers can actually negotiate,” Rose said. “He doesn't have 15 to 17 offers on single-family homes that come in for more than the appraised value.”
He said new homes are more likely to attract home buyers than older homes. Rose has heard from builders that some developers are offering buyers a 5.125% interest rate on a 30-year fixed loan, which is a difficult rate to compete with.
“The flip side of the coin is that some people don't want to live in a bean field,” Rose said. “Some people want to live in an area with trees and character. In my head, I don't think the trend is necessarily toward new housing. But with interest rates low, they're in a better place right now. I think it's advantageous.”
Rose said inventory is expected to remain limited in 2024, but there is evidence that 2024 is poised for a strong real estate market.
Rose said Zillow projects Indiana and the Indianapolis area to be the fourth-strongest real estate market in the country.
“They said once a few homes came on the market, there would be a strong buyer willing to buy,” he said. “I think people are starting to wake up to the idea that home values aren't going down in Indiana. It's still a strong real estate market. We're by no means in decline.”
