When Michael Rocha of Atlantic Realty last gave his local real estate forecast back in November, he was accurate in his assessment that prices would remain stagnant in 2023 due to higher interest rates. In his latest round of market predictions, he believes that the current, calm market won’t last heading in 2024.
Rocha, who was voted Best Realtor by 209 Magazine in 2021 and 2022, believes that competition amongst prospective buyers will be plentiful in 2024 when interest rates go back down. With more competition, supply may remain limited, thus driving prices even higher. It’s the opposite of a market crash, which many folks may still be waiting around for.
“You have these super high rates and you have low inventory. The high rates are higher than people want and it’s shying people away from purchasing and shying people away from selling, where most people thought prices were going to adjust,” Rocha said. “The only correction we really saw was a slowdown in increase in prices. We've still seen an increase, but not as high as what we've seen in the in the last couple years, especially during and after COVID. With just how low inventory we have, it's a perfect recipe for the market to continue to climb and not crash.”
In November, the median sale price of homes in Stanislaus County was $450,000, according to RedFin.com. Today, the median price is $460,000. Current 20-year and 30-year fixed rates are hovering around 7.2%.
“Once rates adjust and they become lower sometime next year, prices will rise significantly,” Rocha said. “If you're willing to throw a lot of money at a real estate purchase and you have the financial means to do so, then you should be okay with waiting. But if you're somebody who was looking to save the most amount of money and use a down payment program and come in just with the bare minimum, then this will be a good time because you're only competing with a handful of buyers in comparison to the 10 or 15 buyers you'll be competing against once rates adjust. That’s why I’m calling it the market of opportunity.”
Rocha predicts that homes currently listed in the high $300,000 range will be joining the rest of the homes in the $400,000 and up range. One factor that Rocha considers when dismissing a market crash is that the approval process has become much stricter since 2008 – a lesson well learned.
“The market crashed last time because there were too many people that were purchasing homes that honestly couldn’t afford those homes. People were not knowing what they got themselves into and banks were lending out money, lending out bank loans to literally anybody with a pulse,” he said. “Since the crash in 2008, banks in general have tightened lending restrictions. They are double, triple and quadruple checking every single thing about every single buyer.”
Prospective buyers, particularly those buying for the first time, should aim to have at least two years of continuous employment, as well as good credit. A credit score of 640 and above gets many individuals approved, but the ideal score is 680 and above. Credit scores in the 700s are considered the best of the best, and should make any hurdles easier to clear.
“I've got quite a few of listings because more and more people are realizing the reality and are starting to get off the fence,” Rocha said. “This has been a market that has directly affected the first time buyer market more than any other market, so we need to do our best as Realtors to assist them in making sure they get themselves into a home.”
