Many real estate experts and economists are optimistic about the 2024 housing market.

With the Federal Reserve signaling in December that it may lower the interest rate several times this year, the general expectation is that mortgage rates and home prices will ease albeit the tight housing supply.

“A lot hinges on lower interest rates. Buyers and sellers who are planning to get into the market this year should prepare themselves,” Eileen Giorgi, President of the Silicon Valley Association of Realtors, said.

Mortgage rates have dropped significantly from last October when they rose to a 20-year high with the 30-year fixed rate at around 8%. The most common home loans are now in the 6% to 7% range, according to Giorgi.

Realtor.com's 2024 Housing Market Forecast and Predictions anticipates that lower rates will help spark an affordability turnaround nationwide.

According to the forecast, the typical monthly payment (mortgage and interest) for a median-priced home is expected to be slightly less than $2,200, or about 35% of the typical national household income in 2024. That's an improvement from 2023, when purchase costs ate up nearly 37% of income.

This increase in affordability will give a foothold to some buyers trying to break into the market, according to the forecast.

“Our 2024 housing forecast reveals the green shoots we've been waiting to see in the housing market and should give buyers some optimism after a grueling few years,” Danielle Hale, chief economist for Realtor.com, said. “Moves of necessity – for job changes, family situation changes, and downsizing to a more affordable market – are likely to drive home sales in 2024. Homebuyers will continue to seek out markets where they feel like they get the most out of their dollar as they look for homes that better meet their needs.”

Jessica Lautz, deputy chief economist at the National Association of Realtors, said some signs of encouragement she sees in the housing market include more new construction coming to the market from home builders as well as a shift in buyer demographics as baby boomers hit retirement age and millennials seek to become first-time homebuyers.

"Baby boomers are the largest share of homebuyers and may be looking for their retirement property," Lautz said. "This year, even the youngest baby boomer (born between 1946 and 1964) turned 60 years of age.

She said baby boomers, in general, seem less concerned with mortgage interest rates.

Half of older boomers paid all cash for their homes last year, she noted.

Additionally, millennials (the largest adult generation) may be looking for their first property or a move-up family home, Lautz added.

Here's what buyers and sellers can expect in 2024:

• Average mortgage rates of 6.8%, with rates edging down over the year to reach 6.5% by the end of the year.

• Home prices to ease slightly and drop by 1.7% after generally increasing since 2012.

• Rents to drop by .2%, making renting a more budget-friendly option than buying in most markets.

• A 14% year-over-year drop in inventory, as existing homeowners with low mortgage rates stay put.

• Home sales to hold steady, rising .1% year over year.

(Bullet points based on Realtor.com's 2024 Housing Market Forecast and Predictions).

Silicon Valley Association of Realtors (SILVAR) is a professional trade organization representing 5,000 Realtors and affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term Realtor is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors and who subscribes to its strict Code of Ethics.

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