There is no denying that mortgage interest rates are higher than they’ve been in years. Historically speaking, however, they are nowhere near all-time highs. But do these high rates mean a real estate bubble is forming? Does it mean homes will lose value? Will the housing market crash in 2024? Read on for answers to these questions and more.


Why are Interest Rates So High?

The average interest rate for a 30-year fixed mortgage hit 8% in October 2023. That means that since January 2020, the average interest rate has risen more than 4%. So what happened?


Interest rates, though linked to inflation, are driven by many factors, most notably the bond market. When yields on 10-year Treasury notes increase, mortgage rates tend to increase.  In 2023, the yield climbed over 4%. The Treasury notes have risen due to the Federal Reserve’s efforts to tame inflation through raising the federal funds rate


A higher federal funds rate makes it more expensive for banks to borrow money, and those added costs are passed on to consumer loans, including mortgages, credit cards, auto loans, etc. However, high interest rates do not necessarily mean that the answer to the question, will the housing market crash in 2024, is a definitive yes.


What Home Supply & Demand Tells Us

Despite high interest rates, the inventory (supply) of available housing remains historically low.  This indicates that people still want to buy homes. But fewer people are selling homes, as many don’t want to give up a 3% interest rate to secure a new mortgage at 8%.  As such, we still have a housing shortage, where demand surpasses supply. This seems to indicate that the answer to the question of will the housing market crash in 2024 is no.  


If We Slide into Recession, Will the Housing Market Crash in 2024?

A cooler job market, leading to higher unemployment, are two of the driving factors behind a recession. But will the housing market crash in 2024 due to a recession? It’s unlikely. Home values have increased significantly over the past several years, so homeowners are unlikely to be underwater (upside down) on their mortgage loans. 

Furthermore, because of the housing shortage, it is unlikely that supply will outweigh demand, driving a real estate market crash.


Buying a Home in Oregon: Is 2024 the Right Time?

The real estate market is cyclical, going through hot markets and cool markets. So, if there is one thing you can be sure of, it’s that change is coming in time. To that end, if you have a down payment, have found a home you love, and are in a good financial position to pay for your mortgage, 2024 is a great time to buy a home. Although you’ll pay more in interest than you would have several years ago, rates will eventually go back down, and you can refinance your mortgage to save money on monthly payments. 

Remember, when you buy a home, you immediately begin building equity. So, even if you’re paying a higher interest rate, you’re investing in your financial future. By contrast, continuing to rent is only helping your landlord to invest in their financial future.  



Get a Quote for Your Mortgage Loan in Oregon

Strategic Mortgage Solutions is an Oregon-based mortgage brokerage. Our mortgage advisors work as your ally, identifying mortgage loans that best suit your needs and budget. We can help you secure a loan whether you’re a first-time homebuyer, buying a second home, or want to tap into your equity in a reverse mortgage. For help with home financing needs and questions, call us today at 541-275-1148 or send us a message.