The Family Mortgage Perspective in 2024

Happy New Year! As we head into 2024, we wanted to take a walk back through memory lane and look at the 2023 real estate and mortgage predictions that were front and center in last year’s January Newsletter. We will follow with a compilation of the 2024 predictions by this year’s prognosticators. 85% of all economists predicted we would have a recession last year. The theory being that the Federal Reserve had raised rates too high, too quickly, which would increase unemployment and lower consumer spending dramatically. That did not transpire. Unemployment barely budged, job growth continued (although at a much slower pace and not in the sectors that drive economic growth) and consumer spending remained strong. One thing that economists did hit the mark on was that inflation came down considerably, from somewhere in the 8 to 9% range down closer to 3% by year-end. And of course, no one saw the stock market running up the way it did. Now for a snapshot of the specific predictions from last year; the first one was that mortgage rates would move lower. They started the year in January in the mid 6% range, slowly increasing and totally peaked in October around 8%. Fortunately, they have come back down into the mid sixes which is where we started the year. The second was that home prices would be mostly flat. That forecast turned out to be dead wrong just like the year before. We don’t have the exact figures for year-end 2023 but by November 2023, we were looking at appreciation of roughly 7% with December probably adding to that slightly. The third was that the housing market wouldn’t crash. This was dead on. With limited supply, the market continues to be robust, albeit with less demand. As we come into an let’s turn our attention to what everybody thinks will happen in 2024:

  1. Mortgage Rates are below 6%, maybe even approach 5%. The Federal Reserve has indicated in December that they are likely done raising rates and in fact on a path to lowering them. Inflation is likely to continue to moderate giving them the green light which should allow mortgage rates to follow. The anticipation of this has already lowered rates by 1% in the fourth quarter.
  2. Homeowners will refinance their mortgages again. Many who have purchased a home in the last two years will likely be a candidate once rates drop below 6%. In addition, many with high interest rate credit cards or buy now pay later arrangements, could benefit.
  3. Mortgage rate lock in effect will be less of a thing. One of the big stories in 2023 was how homeowners were deterred from selling because they would lose their low mortgage rate in the process. More and more homeowners who feel trapped will be willing to make the move once rates fall under 6%.
  4. For Sale inventory will remain very limited. While inventory levels should increase as rates drop, so will demand increase, which will keep a lid on inventory.
  5. Home sales will increase slightly but remain depressed. Most are forecasting a 15 to 20% increase for 2024. That said, with inventory still tight, prices will continue to increase. Est… 4 – 5%.

Unlocking the Art of Living: A few life hacks from John

**Stop Bleeding Cash from Auto-Renewing Bills**

Last year, I decided to monitor my monthly cash flow more closely and tried the Rocket Money app for tracking expenses. The app offers a free version, but I opted for the premium level at $4 per month (billed annually) for its extra features. After linking all my bank accounts and credit cards (using Plaid, a secure, bank-approved platform also used in our loan applications), I was astonished at the number of recurring charges it identified. The app enabled me to cancel or renegotiate some of these subscriptions, leading to significant savings. A year into using Rocket Money, it now pre-emptively identifies recurring and annual renewal charges, allowing timely cancellations. I recommend exploring it in your phone’s app store.

**Be Smart About Your Streaming Services**

The streaming landscape has rapidly evolved, with a surge in new channels and increased subscription fees. Rocket Money helped me spot several forgotten “indirect” subscriptions through platforms like Amazon or Roku. To minimize these costs, start by checking if your phone and internet plans include benefits like discounts or free subscriptions to Netflix, Hulu, HBO Max, Apple TV+, and more. For services with just a few desired shows, plan around release dates, subscribe sequentially, and cancel promptly to maintain access until the subscription period ends.     (Rocket Money App will remind you if you forget) Watch for deals with free trial periods or discounted first months. Additionally, for free entertainment with commercials, consider services like Tubi, offering extensive catalogs of shows and movies on demand.

**Homebuying Hack for 2024: Buy Before You Sell**

As 2024 progresses, the homebuying market is shifting towards a seller’s advantage due to low inventory and increasing buyers, especially as rates trend lower. Making a non-contingent offer on a new home can be a key advantage in a multiple offer scenario. For those needing equity from their current home for a down payment, I’ve assisted clients with our unique home equity programs as a “bridge” loan solution. However, each financial situation is unique, so it’s crucial to explore all options. Contact me today to discuss your possibilities.

Product of the Month

If you are considering purchasing a home or refinancing, make sure and reach out to us first.! We have a program that we are piloting that has 652 census tracts in the Atlanta SMSA that are eligible for reduced interest rates because of their designation. All we need is a property address to check eligibility. There could be a significant difference in rates if your property fits the bill!!

Reign in the Cost of Pets

We all love our Pets, and we are afraid to pull out our wallets for them. The average American spends $111 – $276 each month on their animal depending on the surveys you read. Brace yourself: nearly half of pet owners spend at least as much on the animal’s healthcare is a spend on their own healthcare. Here are ways to save!

  1. Purchase pet food in bulk. Just make sure that you keep it fresh in containers and away from critters. Also, consider a food subscription length through Amazon or Chewy.
  2. Join pet store loyalty clubs. Pet Smart, Petco, or Pet Supply plus to name a few.
  3. Consider generic brands. Generic does not necessarily mean lower quality.
  4. Buy the most durable toys. Consider KONG or BarkBox.
  5. Prevent diseases. Protect your pet by making sure they receive an annual exam, vaccines and pills for tech, heartworm, and flea prevention.
  6. Keep your pet at a healthy weight.
  7. Consider grooming and clipping nails on your own. There are great videos on how to do this on YouTube.
  8. Instead of kennels, consider Rover peer to peer dog walking and pet boarding mobile app.
  9. Consider insurance to help offset the emergency vet bills. There are three types of policies: accident only, accident and illness, and wellness. Ways to save include choosing a higher deductible, purchasing insurance early, get an accident only plan, comparison shop and look for discounts… You may even be able to bundle with your car and home insurance.

Interest Rate Update

Interest rates ended the year right about where they started, in the mid 6% range. In our last update back in the fall, they had peaked around 8%. In their December meeting, the Federal Reserve finally announced their pivot. They went from telegraphing they were in continue to increase short-term rates to projecting cuts in 2024. While they gave no indication of when, the consensus was that they would drop rates by three quarters of a percent in 2024. The mortgage-backed securities market rallied in response to that meeting over the next several weeks dropping the 30-year rate 1 ½%. Most all market participants are anticipating that inflation will continue to moderate early in 2024, paving the path for the Federal Reserve’s first rate cut sometime in the spring. If history is any indication, mortgage rates will continue to moderate in lockstep. With any luck, we may be down closer to 6% or even the high fives in the first half of 2024. Being that we are in an election year will bring even more political pressure for rates to decline. Even though the Federal Reserve is technically independent of those pressures, we all know politics is ingrained in everything nowadays!!