NPLA Meeting Recap: Market Update 2024
Recap and Insights provided by GoDocs
During the recent NPLA meeting, Rick Sharga, CEO of CJ Patrick Company, delivered valuable insights into the US housing market’s current state and future trajectory. While 2023 saw significant shifts, Sharga’s analysis paints a promising picture of a more balanced 2024.
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Existing Home Sales: A Changing Landscape
The real estate market has witnessed significant fluctuations in existing home sales over the past few years. While 2023 saw a considerable decline compared with previous years, with numbers dropping to around 3.9 million, there’s optimism that the market has bottomed out. Preliminary estimates suggest that 2024 could see a modest rebound, with projections indicating a return to over 4 million existing home sales.
Existing Homes: Supply and Inventory Challenges
Despite some improvement from record lows, inventory remains constrained, with the current supply representing only about 3 1/2 months’ worth of housing stock. Low inventory levels continue to exert upward pressure on prices, with demand outstripping supply in many areas.
New Home Sales
In contrast to existing home sales, new home sales have shown resilience, with estimates exceeding 650,000 in 2023. Builders are increasing their output, potentially resulting in 675-700,000 new home sales in 2024. This influx could help drive existing home sales as many new home sales are “move-up” purchases, freeing up some of the existing entry-level inventory — benefiting first-time buyers. New homes are also more affordable, with prices down about 14% from their peak.
Consumer Delinquencies and Foreclosure Activity
Consumers are struggling to pay back their loans, with delinquency rates surpassing pre-pandemic levels in almost every category. Credit card debt has reached an all-time high of over a trillion dollars in the third quarter and is likely to rise even higher in the fourth quarter.
While mortgage delinquencies have stayed below normal levels so far, they are also starting to rise. According to the MBA, mortgage delinquencies have increased by 3.82%, which is the highest number in about a year. Many of these delinquencies are in the early stages, but they are being cured before they can become more serious or lead to foreclosure.
Investor Activity
The investor landscape in 2024 is expected to be dominated by small and mid-sized players, with larger institutions adopting a wait-and-see approach, creating opportunities for private lenders who cater to these active small to mid-sized investors. However, it’s crucial to stay informed about market shifts and regulations, as the landscape can adapt quickly.
2024 Market Outlook
While 2024 won’t be a repeat of 2023’s rapid adjustments, it seems poised to be a year of cautious optimism. The housing market is unlikely to experience a crash, but price increases are expected to be more moderate compared to recent years. Affordability and inventory concerns remain, but gradual improvements are anticipated. Investors and rental property owners, particularly those focused on single-family rentals, might find opportunities in this evolving market.
While the real estate market faces challenges such as inventory shortages and consumer delinquencies, there are also signs of resilience and potential for growth. With careful monitoring and strategic planning, stakeholders can navigate the evolving landscape and capitalize on emerging opportunities in the year ahead.
Author Bio:
GoDocs is an innovative leader in automated loan document generation, transforming the commercial lending process. With a fully cloud-based platform, GoDocs provides a flexible digital solution that makes commercial loans more cost-effective to document and faster to close, all while maintaining compliance in all 50 states. GoDocs is a Corporate Member of the NPLA.