'Cautiously optimistic': Experts weigh in on what to expect in Massachusetts real estate in 2024

The real estate market faced many challenges in 2023. Buyers and sellers waded through an environment of high interest rates, low housing stock, inflated prices and strong competition.

So, what will 2024 hold for buying and selling homes in Massachusetts?

WBUR asked some experts to weigh in on the market. Here are a few of their reflections and predictions:

First, it's worth recapping 2023. It was a challenging year for homebuyers. High interest rates and low inventory greatly impacted the volume of home sales. Rising mortgage rates made it less attractive for homeowners to list their properties. And the lack of housing coupled with strong buyer demand kept prices inflated — which was not so great for buyers, but was certainly good for sellers. The median home price in Greater Boston even hit a record monthly high of $900,000 in May and climbed still higher in July.

Jared Wilk, incoming president of the Greater Boston Association of Realtors, said there were some signs the market could be easing as the year came to a close and interest rates started to dip.

"There are some properties that have been sitting stagnant for a little while, which are starting to sell in December, which is generally a much slower time of year," Wilk said. "So I think with that, there's becoming more positivity in the outlook for next year.

Wilk said the market is beginning to feel more "normal" than it has in a few years, and he's "cautiously optimistic" about the new year.

Speaking of interest rates, this is the thing to watch in 2024, experts said. As noted, they've already started to dip. And the Federal Reserve recently signaled it's done with interest rate hikes and could even start cutting rates.

"This interest rate shift downward could inspire some sellers to get in the market who had been waiting on the sidelines because it didn't make a lot of fiscal sense for them," said Alison Socha, the outgoing president of the Greater Boston Association of Realtors.

She's referring to the fact that some homeowners with low interest rates on their mortgages may have been hesitating to look for new homes at a time of higher premiums on borrowing.

If those homeowners take the plunge and list their homes, it would be good news for homebuyers who have faced tough competition due to the lack of homes for sale. But, the market will still have challenges, according to Amy Wallick, the incoming president of the Massachusetts Association of Realtors.

"Regardless of interest rates shifting or not, I think that we are still going to see the market remain very consistent through the beginning of 2024 due to demand still being high, availability of financing still being solid, and just inventory being low," Wallick said.

While experts agree lower interest rates will give buyers and sellers more options in 2024, the state still doesn't have enough housing to meet the demand.

"Because we've had such a drought of construction, this is the market we're going to have for the foreseeable future," said David McCarthy, outgoing president of the state's realtor association.

McCarthy said efforts like the MBTA Communities Act are a step in the right direction. The law requires communities to zone for multi-family housing in areas near MBTA transit stops. Cities and towns are grappling with the rule, which has led to heated battles in some communities ahead of a looming Dec. 31 deadline.

"There is no quick fix to our inventory problem in the commonwealth, especially in the eastern part of the state,” McCarthy said. "Those steps will all work towards that. It just takes time."