The final cannonball has been successfully executed, the last Zweigle’s hot dog consumed, and the Jack Rabbit’s concluding ride is now behind us. The summer of 2024 has officially come to an end—replaced by a season of falling leaves and the start of a new school year. For many students, September brings the excitement of fresh beginnings—making friends, embracing new opportunities, and the hope of being named to the varsity football team or the cheerleading squad.
Similarly, the real estate market is entering its own season of renewal. The era of diminishing interest rates is well underway, and many homebuyers and real estate professionals are feeling a rekindled sense of possibility. After two years of elevated rates, it appears we’re finally turning a corner. Several economic trends are driving this shift and fostering a more optimistic outlook.
Economic Indicators & Market Shifts
In July 2024, the Consumer Price Index increased by 2.9% year-over-year, marking the first time since March 2021 that the twelve-month increase has been below 3%. The Personal Consumption Expenditures came in at 2.5%, just slightly above the Fed’s target rate of 2.0%. Meanwhile, the economy added approximately 150,000 new jobs in August—a significant decrease from the 200,000-plus new opportunities created each month throughout most of 2023. While it might sound counterintuitive, a slowdown in job creation is crucial. Too many new jobs would have continued to fuel an overheated economy and runaway inflation.
Collectively, this data signals that disinflation has finally set in. More importantly, it suggests that Jerome Powell may have succeeded in cooling the economy without tipping the country into recession. Two significant outcomes have emerged from this:
- The thirty-year mortgage rate has dropped from a high of 7.3% earlier this year to 6.37% as of August 29th.
- Positive economic data also sets the stage for the Federal Reserve to lower the Federal Funds Rate on September 18th. The question now is not if the Fed will lower rates, but by how much. Will the cut be a quarter percent or half a percent?
It’s Complicated…
As students dive into a new school year, they often find that tackling advanced subjects like calculus can be more challenging than it initially seems. What appears straightforward at first glance quickly reveals its complexity as more information is gathered. Similarly, while the continued descent of mortgage rates might suggest that buying a home will become easier, the reality is more nuanced. Lower interest rates could indeed enhance affordability, encouraging more buyers to start or resume their search. However, the persistent issue of limited inventory complicates the market, making it difficult for buyers to realize their dreams of homeownership. Just as mastering calculus requires perseverance and strategic thinking, navigating the real estate market in the coming months will demand patience and a clear understanding that things may not be as simple as they first appear. In fact, buyers may once again find themselves competing with an army of adversaries, as sellers continue to benefit from this dynamic. In the short term, the market may feel all too familiar.
But there is hope on the horizon for buyers in 2025, thanks to two major factors:
- Mortgage rates are expected to continue their downward trend.
- Rochester, which has faced one of the steepest declines in housing inventory in recent years, is slated to experience a substantial increase in new listings in the coming year.
A Constant Evolution
As the real estate market continues to evolve, the landscape of commissions is also undergoing significant changes. The recent DOJ rulings have prompted buyers, sellers, and their agents to explore new strategies to maximize their advantages. Stay tuned for my next blog, where we’ll delve into these changes and how they might impact your real estate journey.
In Conclusion
As we approach the final stretch of this year’s real estate season, it’s a good time to reflect on the opportunities that September and October offer. These months present a great opportunity to buyers and sellers, especially in light of the promising trends that we’ve discussed. This fall, with signs of a robust market, could be particularly advantageous for those ready to make a move.
If you’re thinking of buying or selling, or simply want to discuss how current market conditions might impact your plans, feel free to give me a call at 330-8750. I’d love to talk!
Until then…
Go Bills!