2024 Indianapolis Real Estate Forecast

Monday, January 8, 2024   /   by Derek Gutting

2024 Indianapolis Real Estate Forecast

2024 Real Estate Expectations

 

From all of us at The Gutting Group we wish you a very happy and prosperous New Year.  We hope 2024 has welcomed you with renewed vigor and excitement for all that the year has ahead.

Summarizing the 2023 real estate market, the NUMBER OF SALES were down drastically.  In the US, the number of existing home sales ended up at roughly 4.1M.  To put it in perspective, that is essentially the same number of homes that sold in 2008, during the great recession.  Between 2009 - 2022, we averaged about 5.2M-5.3M existing home sales/year, with 2021 reaching 6.1M.  While sales were incredibly low, the home prices continued their appreciation.  The Indianapolis market appreciated 5% (on average).  The first half of 2023 sellers were seeing multiple offers on their homes, buyers were struggling to get homes under contract due to the competition.  However, as the feds kept raising rates and the mortgage rates ballooned to 8%, the buyers retreated and the last 3 to 4 months of the year, the multiple offers were gone, homes were sitting on the market, sellers were reducing their prices and buyers were once again successful at getting homes bought ‘under list price’.  The 4th quarter became a more balanced market; however, it was still considered a seller’s market. 

 

What to expect in 2024?

As I am sure you have heard, the feds are feeling good that the economy is heading towards a soft landing as the latest INFLATION number for November cooled to 3.1%.  The feds like to see inflation maintaining around 2%.  Keep in mind, we were at 6.4% in January of 2023, so inflation has retreated significantly, led by gasoline prices - thank goodness.   This has led the feds to announce their intentions of lowering interest rates approximately 3 times this year.  Some economists are predicting the feds may lower rates 5 to 6 times in 2024.  The stock market has responded favorably to these forecasts, as have the mortgage rates, lowering in the 6.8% to 7% range at time of this writing.  The lower mortgage rates brought out the buyers that had been sitting on the proverbial fence, helping real estate sales to increase as we entered the holidays.

 

The INVENTORY levels of ‘ACTIVE homes on the market’ is a number that we watch and track weekly at The Gutting Group.  The Indianapolis market is basically at the same level as we were last year at this time (Jan 2023), between 4,600 and 4,800 active homes for sale.  This is an incredibly low number.  A good balance in the Indianapolis market would be 8,000 to 10,000 this time of year, which we haven’t seen in some time.


Many sellers decide to list in the spring, so the inventory levels will continue to go down between now and late April as the buyer demand outpaces the new homes that hit the market.  Last year we saw the ACTIVE inventory levels erode to 3,200 by April, in which we are projecting much of the same this year, quite possibly even lower. 

 

With interest rates declining, we anticipate this will drive up the buyer demand more in Q1 of this year than Q1 last year, when rates were increasing.  There is a massive amount of what we call ‘locked up’ inventory, where homeowner’s current mortgage rates are under 4%, so they would need to have a very compelling reason to sell.   We don’t see many of those homeowners selling unless rates come down to somewhere near what they have now, or unless their motivation is such they will have to sell (i.e., relocation, divorce, significant life change, etc.) Statistics say 80% of all homes with loans have mortgages with 5% or less.

 

The bright side is homebuilders are beaming with confidence with the anticipation of rates falling.   Indianapolis housing permits had been down every month from Dec 2021 through middle of 2023.  That shifted this summer and for 5 straight months now housing permits have increased in the Indianapolis market.  Sept +59%, Oct +49% and Nov +64% when comparing year over year.

 

In summary, the available inventory of homes for sale will continue to be a source of frustration for buyers; however, new construction will provide much needed relief.   As rates decline and buyers enter the market more aggressively, coupled with low inventory, it sure appears buyers will be facing stiff competition when making offers, especially as we enter the spring and summer markets.  Sellers should see great sale prices in 2024; however, the sellers that get their homes ready and presentable for the market (fresh paint, flooring, light fixtures, landscaping, and overall clean home) will see a much stronger price and quicker sale than those that don’t.   We cannot stress enough to put a little time and effort into getting your home ready and possibly ‘invest’ some money to freshen it up.  Many view this as an ‘expense’, but it is an ‘investment’ in which you can expect to get a return on.    

 

If you would like to discuss the market or your situation further, do not hesitate to call.  If you are considering new construction, we have been selling new homes for 20+ years and can help you through that process which has a lot of nuances involved that buyers just don’t realize.   We can also offer a GUARANTEED BUYOUT* on your existing home, so you can move forward with confidence on your new home purchase.

 

CALL US at 317 846-4888. 
Derek Gutting 

*Some restrictions apply to the Guaranteed Buyout Service

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Keller Williams Realty | The Gutting Group
Derek Gutting
11550 N Meridian, Ste 450
Carmel, IN 46032

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