Ryan Serhant believes lower rates and post-election clarity will drive housing demand heading into 2025
As the 2024 US presidential election approaches, real estate broker Ryan Serhant is optimistic that the housing market will see a recovery soon after.
Despite the current slowdown in buyer activity, Serhant believes that falling mortgage rates and post-election confidence could trigger a strong rebound in 2025.
He described the current market as being in a “wait-and-see” mode, with inventory levels rising and interest rates at 20-month lows, yet buyers are holding off on making purchases.
“Inventory is up. Interest rates are at 20-month lows, but buyers are still sitting on the sidelines,” Serhant said in an interview with Fox Business. “No-one wants to catch a falling knife, but also no-one wants to jump into a speeding car.”
The real estate expert remained optimistic about the market’s future, pointing to strong fundamentals like a 6% year-over-year price increase. He believes the upcoming November presidential election will serve as a turning point for the housing market, predicting a surge in activity by 2025.
“I think people are waiting to see what happens in November and that will take us into a roaring 2025,” Serhant added.
His forecast is tied to the expectation that mortgage rates will continue to decline. Once rates drop into the 5% range, with some buyers potentially securing rates in the high 4% range, Serhant expects to see increased liquidity across all segments of the market – from institutional investors to individual homeowners.
Lock-in effect
Despite the positive outlook, Serhant acknowledged the current hesitation among homeowners. He pointed out that about 90% of existing home loans are locked in at interest rates below 5%, which has caused many homeowners to hold off on selling, creating a “lock-in effect”.
“Most homeowners are sitting there and saying, ‘You know what, I’m gonna wait a little bit longer,’” Serhant explained, leading to historically low transaction volumes. According to his estimate, only 2.5% of US homes will change hands in 2024.
Not everyone shares Serhant’s optimism. Nick Gerli, CEO of Reventure Consulting, pointed to ongoing market problems despite the recent dip in mortgage rates. Gerli highlighted three key factors that are suppressing demand: affordability constraints, buyer exhaustion after the pandemic-driven housing boom, and a record level of pessimism about the housing market.
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Gerli emphasized that while mortgage rates have declined, buyer demand remains weak. Mortgage applications are down 57% from their pandemic peak and 43% below pre-pandemic levels. Industry expectations of a quick rebound in response to lower rates have yet to materialize.
Data from the University of Michigan shows that 87% of consumers believe it’s a bad time to buy a home, exceeding even the early 1980s when mortgage rates hit 18%. Meanwhile, Redfin’s August data showed the median US home list price at $432,849. With mortgage rates hovering around 6.62% for a 30-year loan, many potential buyers are struggling with affordability.
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