Housing Market Outlook: Top Forecaster Says Home Prices to Climb 7%Menu iconSearch iconBusiness Insider logoBusiness Insider logoAccount iconAccount iconClose iconChevron iconAccount iconShare iconFacebook IconEmail iconTwitter iconLinkedIn iconLink iconSave Article IconAngle down iconClose icon
Nik Shah, the chief executive of Home.LLC, nailed his housing market forecast last year, accurately predicting in November 2022 that home prices would climb even as other real estate experts said they were set to drop.
In 2024, he expects home prices to climb between 4% and 7%, according to an interview with ResiClub.
"Barring a black swan event, we predict that the housing market in 2024 will appreciate more than 2023," Shah told the real estate outlet.
For reference, the S&P CoreLogic Case-Shiller National Home Price Index notched a 4.8% annual gain up to October 2023, in line with Shah's estimate.
He forecasts the Case-Shiller home price index to climb again in 2024 as falling mortgage rates bring buyers back to the market, and as demand outpaces tight supply.
AI models used by Shah's firm project a 5 million increase in homebuyers for every 1% drop in rates. To that point, he said there are fewer than 1.5 million homes listed for sale.
"For resales, our AI projects that decreasing rates will increase demand way more than increasing supply," the executive said. "Plus, there's a 11% annual drop in construction of single-family homes. Plus, increasing unemployment won't materially increase delinquencies because the credit quality and home equity of most borrowers is pristine."
He added that even as the national home price index appreciates, the company remains bearish on metros including Austin, Boise, and Denver, a view that hasn't changed since 2022.
Home.LLC ultimately remains bearish in the long-term, Shah told ResiClub, given declining birth rates and affordability challenges waiting for Gen Z. At the same time, aging boomers will lead to an uptick in housing supply, which will should help ease prices.
Meanwhile, findings from a separate Zillow survey suggest that the housing market could be breaking free from the "rate lock" phenomenon that froze activity last year.
Owners now appear less deterred by high rates when weighing whether to sell their homes, with 21% of survey respondents reporting they are considering listing their house for sale in the next three years.
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