Real estate marketplace Zillow has predictions for what will happen to the Austin and national housing markets in 2024, including cost decreases, supply increases and the arrival of generative computer programs (often called artificial intelligence or AI) to the buying process.
AUSTIN (KXAN) — Real estate marketplace Zillow has predictions for what will happen to the Austin and national housing markets in 2024, including cost decreases, supply increases and the arrival of generative computer programs (often called artificial intelligence or AI) to the buying process.
In 2021, Zillow declared Austin the nation's hottest housing market. It cooled slightly on Austin in 2022, but still ranked the city as the 10th hottest. In 2023, the company declared Austin's housing market "ice cold."
But in a Thursday interview, Zillow Senior Economist Orphe Divounguy said that 2023 has been "a great year" for Austin and the U.S.
"We started the year with high inflation that of course affected mortgage rates, and a cooling housing market," Divounguy said. "Austin is one of those metros that really lead the way when it comes to the building of new housing... housing inventory is now up 23% compared to before the [COVID-19] pandemic."
He expects that home buyers and sellers will be well positioned for the 2024 housing market, and that the Austin metropolitan area appears healthier than other parts of the U.S.
An end-of-year speculation about interest rate cuts by the U.S. Federal Reserve abounds, with Divounguy calling the situation "very difficult to forecast."
"I look at headwinds and tailwinds. We've got some good news — disinflation is very much on the way, you see inflation decline, and as inflation continues to decline, wages adjusted for inflation increase," he said. "I think the stock market performed better than anybody had hoped. So you take mortgage REITs [Real Estate Investment Trusts] easing into next year, you add the fact that real wages have improved, and our financial wealth has also increased this year. Those are all tailwinds for the housing market going forward."
For the individual buyer, whether or not to buy a home in 2024 will remain a personal decision based on a buyer's financial situation.
"When you look at the the macro economy... all of these factors are just moving in the right direction to support housing demand going into 2024. Sitting on the sidelines when you have the opportunity is probably not the best idea," Divounguy said.
Zillow, at the end of November, released a list of six predictions for the national housing market and home buying process:
The "new starter home" shift has already started, according to Divounguy.
"Americans still prefer to own their own home, especially if they have kids. They prefer that stability. Our research shows that new homebuyers today are more likely to be married with kids or have at least a large pet," he said. "We're likely going to start to see a lot of these people who are on the fence, as mortgage rates continue to ease, they are likely going to be pulled into homeownership, because I think preferences haven't really changed."
As for AI? Another tool for those involved in the process.
"It just makes the process so much easier, especially in an environment where affordability is very low still. Finding the homes that fit within your budget, but that also fit all of your requirements is a little bit more difficult without the help of an agent," Divounguy said. "The ability to search in natural language is going to be key to speed up the home search process and make it easier."
