Why 2024 Was the Toughest Year for Home Buyers and Sellers in Three Decades

We got a lot of questions at Advanced Appraisal TN and The CRV Group about what is happening in the real estate market.  In 2024, the U.S. housing market experienced a significant downturn, with existing-home sales plummeting to levels not seen in nearly three decades. This decline is attributed to a combination of high mortgage rates and a persistent shortage of available homes, creating a challenging environment for both buyers and sellers.

_{Key Factors Contributing to the Decline:}

• Elevated Mortgage Rates: The average 30-year fixed mortgage rate remained above 7% throughout much of 2024, significantly increasing borrowing costs and deterring potential buyers.
• Limited Housing Inventory: Many homeowners, locked into lower mortgage rates from previous years, were reluctant to sell, leading to a scarcity of available homes on the market
• Affordability Challenges: The combination of high borrowing costs and limited supply drove home prices higher, exacerbating affordability issues for many prospective buyers.   
• Insurance Rate Increases: Rising flood and wildfire risks have driven up residential insurance rates, especially in high-risk areas. Homeowners in disaster-prone regions now pay an average of $2,321 in premiums, compared to $1,277 in safer areas, reflecting insurers' growing costs amid climate challenges.

_{Looking Ahead: What to Expect in 2025}

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‍Experts predict a gradual easing of mortgage rates in 2025, potentially reaching around 6% if financial conditions improve. However, the ongoing issue of low housing inventory may continue to challenge the market. Both buyers and sellers should stay informed and be prepared to adapt to these evolving conditions.

‍Conclusion: The 2024 housing market downturn underscores the importance of understanding the complex interplay of factors affecting real estate. By staying informed and flexible, buyers and sellers can better navigate the challenges and opportunities that lie ahead in 2025.

Source Links and Suggested Links:

• Tips for First-Time Homebuyers in a Competitive Market.   https://www.realtor.com/marketing/resources/10-pro-tips-for-working-with-first-time-homebuyers-in-2025/
• How to Navigate High Mortgage Rates as a Buyer. https://money.com/tips-for-homebuyers-high-mortgage-rates/
• National Association of Realtors – Latest Housing  Market Data] (https://www.nar.realtor/research-and-statistics)
• Fannie Mae Economic and Housing Outlook]  (https://www.fanniemae.com/research-and-insights/forecast)    
• Why 2024 sucked for home buyers and sellers.  https://www.marketwatch.com/story/existing-home-sales-fall-to-30-year-low-in-2024-ebcd4030

Stay updated on the latest housing market trends by subscribing to our newsletter.  Advanced Appraisal TN and The CRV Group are a leading source forreal estate information in Tennessee. Note: This blog post is based on information available as of January 31, 2025. For the most current data and trends, please refer to the latest reports from reputable sources.