Keller Williams Advisors Realty - The Blatt Group

Looking into the Crystal Ball

Forecasting Real Estate Trends For Q4 2024

Real Estate Crystal Ball

Everyone wants to know: What’s going to happen with real estate? Is now a good time to buy/sell? How will the election affect the market?

These are all great questions, and to answer them we partnered with mortgage loan officer and data analytics professor Frederick Duff to look at the local data and make a forecast for the fourth quarter of 2024.

A Change in Momentum

It is no secret that home sellers have held a clear negotiating advantage in recent years. Fueled by historically low interest rates, lack of available housing, and a general sense of wanderlust following extended periods at home during the COVID-19 pandemic, the Dayton market witnessed a record number of sales in 2020 and 2021. The dollar volume of sales continues to increase inspite of slumping sales over the last two years.

While the market still favors sellers, energy has shifted back towards normalcy, according to Mr. Duff. In his analysis, Mr. Duff reviewed the disparity between sales and active listings in the Dayton multiple listing service dating back to 2010. He found over that time period that a normal market was indicated by 80% of monthly listings remaining available at the end of the month. Disparity greater than 80% favors buyers, and while lower disparity levels favor sellers.

At the peak of the sellers market, only 59% of active listings remained available at the end of the month. At that time it was common for buyers to bid well above listing prices, waive inspections, offer appraisal gap waivers, give extended occupancy after closing, and write offers sight-unseen. These practices contributed, in combination with the fastest increase to the 30 year fixed rate mortgage, to sales plunging to 2014-2015 levels over the last two years.

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Disparity % between Sales and Active Listings. Source: Dayton REALTORS® MLS Statistics accessed 9/5/2024. Data Analysis © Frederick Duff, MBA Septmber 12, 2024.

The Forecast

Over the last two and three-quarter years the disparity between Dayton listings and sales has been climbing, settling at 72% at the end of last month. While inventory remains low, it is also on the rise. Then, yesterday, the Federal Reserve announced the first rate cut to the overnight Fed Funds Rate in four years. And it was BIG... 50 basis points instead of the projected 25! While the fed funds rate does not directly corolate to the 30-year mortgage, those have also been trending downward in recent months.

This has been a rough year for the local economy. Inflation remains approximately 50% of the target rate of 2% year over year, and unemployment demonstrated a sharp uptick since January. Dayton outpaces the national average in unemployment, sitting over 5% currently. If these trends continue into next year, the model predicts significantly decreasing sales. For this reason, both buyers and sellers thinking of making a move may have their best chance between now and January.

Conclusion

While the longterm forecast looks bearish, Mr. Duff is keen to warn that these forecasts are a a guide only, and not a unit for unit prediction. The farther out in time the model looks, the less clear (and precise) the picture becomes. Last month, the model predicted within 1% (8 units) the total number of sales for the Dayton market. Outside of six months, any number of unknown factors and variation of the known factors may affect the trajectory of the of market.

The takeaway for savvy consumers is this: we know what the market is today. The right time to move is when it fits your finances and when it fits your life. No one can time the market. So take advantage of what the current market offers when it makes sense for you to make your next right move. And if you’re ready to have that conversation, we are here to help!

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