When it comes to housing, expectations can really shape our decisions. Often, the fear of missing out or losing out influences us more than we realize. Research even shows that the pain of financial loss is twice as strong as the joy of financial gain.
In 2024, this mindset was a big factor in the slowdown of home sales. Buyers were promised lower mortgage rates, but those rates never came through. Sellers were waiting for new listings to inspire them to move, but fresh inventory stayed limited.
It’s easy to forget, but mortgage rates have been under 7% for more than 20 years. They actually peaked over 16.5% back in 1981. Since 2022, rates have hovered between 6.1% and 7.8%, and those ultra-low rates of 3-4% aren’t likely to come back anytime soon.
Even though demand has consistently outpaced supply, and mortgage rates have stayed fairly steady, buyer confidence still hasn’t bounced back enough to boost the market. As a result, home sales in 2024 are projected to be about 5% lower than in 2023, mainly due to a lack of inventory and growing affordability concerns that are limiting the number of buyers.
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