As the new year approaches, American homebuyers are still widely expected to suffer from the same lack of affordability which has characterized the past couple of years, which will reflect on the modest growth of sales in the national housing market next year.
According to Goldman Sachs’ forecast for next year, home prices will grow by a modest 0.6 percent next year and new home sales will go up to 723,000 from 680,000 in 2023. Existing home sales are expected by the investment bank to decline to 3,834,000 in 2024, down from 4,092,000 this year. In October, existing home sales dipped 4.1 percent to an annual rate of 3.79 million, the slowest pace since 2010, according to the National Association of Realtors (NAR).
But some affordable real estate markets in the Northeast, Midwest and Southern California will represent an exception, seeing a rebound that will offer a great occasion for homebuyers to make an investment, according to real estate broker Realtor.com.
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In its annual forecast analyzing the country’s 100 largest metropolitan areas, Realtor.com has identified the hottest housing markets of 2024 based on expected sales and price growth.
The 10 resulting cities are either smaller, more affordable cities close to big, more expensive urban centers in the Midwest and Northeast, or metros in southern California which have experienced major drops in sales this year and are expected to bounce back with lower mortgage rates.
Mortgage rates have dropped for five consecutive weeks and are expected to continue sliding down next year after the Federal Reserve announced on Thursday that it will soon shift its inflation campaign towards cutting rates.
The following ones, according to Realtor.com, will be the best cities to buy a home in 2024, meaning the ones with the biggest gains in sales and price growth. Half of the cities on the list are on the West Coast.
- Toledo, Ohio
- Oxnard/Thousand Oaks/ Ventura, California
- Rochester, New York
- San Diego/Chula Vista/Carlsbad, California
- Riverside/San Bernardino/Ontario, California
- Bakersfield, California
- Springfield, Massachusetts
- Worcester, Massachusetts/Connecticut
- Grand Rapid/Kentwood, Michigan
- Los Angeles/Long Beach/Anaheim, California
“The top markets for 2024 are areas where we expect to see sales and prices grow the most next year among the top 100 US metros,” Realtor.com’s Senior Economic Research Analyst Hannah Jones told Newsweek. “These markets generally fall into two camps: affordable metros in the Midwest and Northeast, and higher-priced Western metros.”
“The Midwest and Northeast markets on the list are expected to retain their popularity into 2024 as they offer affordable options amid a relatively expensive national housing market. These areas promise more bang for your buck and desirable quality of life amenities,” Jones explained.
“The West coast markets on this year’s list are expected to see sales and prices pick up after relatively depressed levels in 2023. However, sales are expected to remain well below pre-pandemic levels as affordability continues to weigh on buyers.”
As of October, all of these cities—with the exception of Worcester—had median listing prices below the national average.
The list surprisingly includes some of the most expensive metropolitan areas in the country, including Los Angeles and San Diego. But Realtor.com said that it expects new inventory in these areas next year to revamp sales, which have generally been slugging in southern California in 2023, as mortgage rates ease and home prices dip.
The midwestern and northern cities in the list have been included by Realtor.com because of their affordability, their proximity to bigger urban centers, their thriving job markets and the good quality of life at a relatively low cost of living. Springfield and Worcester, for example, are much more affordable for homebuyers than Boston. Even as Worcester remains 14.7 percent above the national average in terms of prices, homes in the city are still 41.8 percent less expensive than in the Boston area.
Existing home sales year-over-year are expected to climb to 14.0 percent in Toledo; by 18.0 percent in Oxnard; by 6.2 percent in Rochester; by 11.0 percent in San Diego; by 13.8 percent in Riverside; by 13.4 percent in Bakersfield; by 10.5 percent in Springfield; by 9.1 percent in Worcester; by 6.1 percent in Grand Rapids-Kentwood and by 9.2 percent in Los Angeles.
The median sale price of existing homes is expected to jump by 8.3 percent in Toledo year-over-year; by 3.3 percent in Oxnard; by 10.4 percent in Rochester; by 5.4 percent in San Diego; by 2.0 percent in Riverside; by 2.3 percent in Bakersfield; by 4.2 percent in Springfield; by 4.8 percent in Worcester; by 7.2 percent in Grand Rapids-Kentwood and by 3.5 percent in Los Angeles.
“While we expect affordability to start turning around in 2024, the housing market is likely to continue to be challenging for many prospective buyers,” Jones said.
“Shoppers who are looking to buy a home in the next year are likely to see slightly lower mortgage rates, which will bring down the cost of financing a home purchase,” she continued.
“To weigh whether 2024 is the right time to buy, prospective buyers should take stock of their financial readiness and keep an eye on mortgage rates. While 2024 is not expected to bring significant progress towards affordability, slightly improved conditions could create more opportunities for hopeful buyers.”
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
