The Current Housing Market

The housing market appears to be turning a corner, offering frustrated buyers a renewed opportunity to enter after enduring a challenging period.

This shift comes after a tumultuous few years in the U.S. housing market, marked by home sales plummeting to their lowest level in 30 years in 2023 and mortgage rates reaching multi-decade highs.

However, buyers re-entering the market soon may find conditions more favorable than those in 2023.

"We think the housing market is going to improve over the next half of a year," said Glenn Kelman, CEO of Redfin, in a recent interview. "Mostly, we hit rock bottom in the first quarter of 2024, and I would expect the housing market to do a little bit better through the rest of the year."

Here are three signs that industry experts say indicate more favorable conditions for buyers:

1. Rising Inventory

More inventory is starting to flow into the housing market, which could help lower prices. For the past few years, a shortage of inventory has limited options and driven prices up for prospective home buyers.

Unsold housing inventory increased by 16% year-over-year in April, reaching 1.2 million units, according to the National Association of Realtors. While this is still below the desired inventory levels, it's an improvement from 2023, when the "lock-in" effect kept sellers from listing their homes as they held on to lower mortgage rates secured in previous years.

Robert Reffkin, CEO of the real estate brokerage Compass, noted that buyers are beginning to withdraw from the market due to poor affordability conditions, which has helped to balance supply and demand. "We are now seeing more sellers than buyers," Reffkin said in a recent CNBC interview.

2. Dropping Home Prices

Increasing inventory has the potential to lower home prices as supply and demand rebalance. House prices hit a record high in April, with the median U.S. home price reaching $387,600, according to Redfin data.

However, Reffkin pointed out that 34% of homes on the market saw a price drop in May, the highest percentage recorded in the past 10 years. Prices are also starting to fall in key metropolitan areas like Texas and Florida, which have seen significant new home construction, according to Redfin data.

"The boom is over, in part because many people have been priced out. Now, homes are sitting on the market and price growth is stagnating," Redfin noted in a recent report.

3. Decreasing Mortgage Rates

The 30-year fixed mortgage rate has declined over the past six months. Borrowing costs for the most popular U.S. mortgage eased to 7.02% last week, down from a peak of 7.79% in late 2023, according to Freddie Mac data.

High mortgage rates have been a major issue in today's housing market, deterring both buyers and sellers from making deals. However, mortgage rates could continue to decrease as markets gain confidence in upcoming Federal Reserve rate cuts, according to Kelman.

The Federal Reserve has indicated it won't cut interest rates until it is confident that inflation is returning to 2%. But inflation now appears to be at a "reasonable" level, with consumer prices cooling to 3.4% in April, Kelman added.

Reffkin also expects mortgage rates to come down in the coming months. A drop to 5%-6% would significantly boost the housing market, but even a 6.5% 30-year mortgage rate would make the market "very strong," he said.

"We feel reasonably good," Kelman said about the housing market. "I just don't want to have a party here and drink a bunch of champagne … it's just a little bit better, and that's worth noting."

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New Corporate Offices in Jefferson Parish

One of New Orleans' leading construction firms is planning a significant expansion in Jefferson Parish, which might include relocating its corporate offices. This move is part of a strategy to enhance its business segment focused on manufacturing and assembling building components in a factory setting.

RNGD, formerly known as Palmisano Construction, is embarking on a $26 million expansion of its pre-fabrication factory near the Earhart Expressway in the Labarre Business Park. The expansion plans also include establishing a new training academy for construction workers and new corporate offices. Currently, the company's headquarters are located in the Lower Garden District.

CEO Wes Palmisano is in negotiations with Jefferson Parish to secure a multi-year property tax break as part of this proposed relocation.

The expansion is expected to create approximately 250 to 260 permanent jobs over the next five years, more than doubling RNGD's current workforce, with an annual payroll exceeding $37.8 million, according to official documents.

In April, JEDCO initiated discussions with RNGD regarding the incentive terms. Although the agreement is not yet finalized, Palmisano mentioned that the expansion and potential office relocation plans remain tentative.

Palmisano expressed optimism about making an announcement soon, though much hinges on the outcomes of negotiations with JEDCO and whether the project's cost estimates are financially viable.

"The long-term vision — to expand our prefabrication facility — is a constant," Palmisano stated. "But we are trying to decide if it makes sense. There are still a lot of balls in the air."

Meanwhile, RNGD's parent company, WJ Palmisano, has listed its 30,000-square-foot headquarters at 1730 Tchoupitoulas Street for sale at $10 million. This building was opened in 2017.

'Exciting plans' Should the expansion project proceed, it would advance Palmisano's goal of increasing off-site, modular construction to enhance efficiency in building projects.

Palmisano's grandfather founded the firm as a homebuilding business in New Orleans after World War II. Although the company continues to handle most construction projects traditionally on-site, it has recently shifted its focus towards manufacturing components for buildings, bridges, and roads in a factory for easier and more efficient assembly.

In 2022, Palmisano opened a 35,000-square-foot factory on a 1.5-acre site in the Labarre Business Park for RNGD. Earlier this year, he purchased an additional 5.5 acres adjacent to the factory for $3.8 million to support expansion efforts.

The expansion plans include constructing a new 80,000-square-foot manufacturing and steel fabrication facility and enlarging the existing factory, thereby boosting RNGD's production capacity.

The project also entails building a 20,000-square-foot facility for Renegade Academy and a new 35,000-square-foot corporate office, as per documents submitted to JEDCO.

Palmisano noted that the expanded training academy would allow Renegade Academy to grow, offering training in general construction skills and proprietary specialty skills used in modular building processes.

With an enhanced training facility, Renegade Academy could also expand into soft-skills training and leadership development, which are in high demand in the construction sector, Palmisano added.

"The training component is what is the most exciting thing about this to us," said JEDCO Executive Director Jerry Bologna, who is collaborating with Palmisano on bringing the project to Jefferson Parish. "It would be a good thing for the parish."

Incentives Both Bologna and Palmisano indicated it's premature to discuss the specifics of the potential tax break, known as a Payment In Lieu of Taxation (PILOT).

Typically, such deals last for 10 to 20 years, allowing a company to make an upfront or annual payment to the parish that is less than its property tax bill would be. These incentives are linked to job creation and can be revoked if hiring targets are not met.

In 2016, before Palmisano commenced construction on its 30,000-square-foot office building on Tchoupitoulas, it sought a 10-year property tax break from Orleans Parish and received preliminary approval. However, the company later withdrew the request and did not receive the incentive, Palmisano explained.

Palmisano has not yet decided whether to sell the building, which was designed to allow the addition of a third and fourth floor. He listed it to gauge market interest.

So far, the building has attracted considerable attention but no offers, said Jack Egle, a broker with Felicity Property Co., handling the listing.

"It could be for an owner-occupant or it can be reconfigured as a multitenant building," Egle noted. "It could sell to an investor who could lease it."

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Keep Your Energy Bills Low

As summer approaches, staying cool and keeping your energy bills low requires a bit more effort. To help you enjoy the sunny season while saving energy, here are some practical tips:

Close Your Curtains

Whether you have curtains, blinds, shades, or shutters, keeping your windows covered can significantly reduce energy use. According to the U.S. Department of Energy, 75% of window coverings remain in the same position daily, leading to unwanted solar gain—the heat absorbed from the sun's radiation. To minimize this, cover windows receiving direct sunlight during the day and cover those facing east at night to block the morning sun.

Give Your Oven a Rest

While the refrigerator is the kitchen's biggest energy consumer, using the oven in summer can increase your home's temperature, making your air conditioner work harder. Instead, opt for the stovetop, microwave, or air fryer, which use less energy. Or, embrace the warm weather and grill your meals outside. This keeps your home cooler and may even enhance the flavor of your food.

Flip on the Fan

Raising your thermostat by two degrees and using a ceiling fan can reduce air-conditioning costs by up to 14%, according to the EPA's Energy Star program. Ensure your fan spins counterclockwise in summer for maximum cooling. Ceiling fans make the room feel cooler by evaporating sweat and circulating cool air, creating a wind-chill effect. Remember to turn off fans when no one is in the room to save energy.

Upgrade to a Heat Pump

Heat pumps are an energy-efficient option for both heating and cooling your home. They transfer warm air indoors in winter and outdoors in summer. The Trane XV20i Variable Speed Heat Pump with Trane Link, awarded by the Good Housekeeping Institute, is a top performer. It adjusts based on outdoor temperatures and humidity, using minimal energy while maintaining your home's temperature within half a degree of your setting. The quiet, variable-speed motor ensures comfort during hot summer months.

Pairing the heat pump with a Trane Link UX360 Smart Thermostat offers additional control. You can monitor and adjust the temperature from your smartphone, optimizing energy use.

Change Filters Frequently

To maintain the efficiency of your heating and cooling systems, replace air filters every 30 to 90 days. This not only improves indoor air quality by capturing dust, pollen, and pet dander but also reduces energy consumption by 5 to 15%.

By implementing these energy-saving strategies, you can enjoy a comfortable, cool home and lower energy bills this summer.

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Choose Your Realtor Wisely

Buying your first home is an exciting milestone and a huge investment. As a first-time buyer, you have a lot to learn and consider, with no straight path to follow. The experience is unique for everyone, and navigating it successfully requires a blend of personal and financial planning. Here are some key insights and trends to keep in mind.

The Basics: Financial Preparedness

First and foremost, buying a home is a significant investment in your personal life and financial well-being. A good credit score, stable income, and sufficient down payment are crucial. Your home buying timeline should be dictated by your aspirations and financial readiness, not just market conditions.

Market Trends to Watch

The housing market evolves with technology and policy changes. For instance, recent tech advancements mean buyers can access extensive property information, including market analysis and neighborhood insights. Realtors must keep up with these changes, and buyers can demand more from them.

A notable shift involves a recent court settlement affecting the National Association of Realtors (NAR). Traditionally, sellers often covered commission fees for both their agents and the buyers' agents. The new settlement disallows this practice on NAR-affiliated listing sites, putting commission arrangements in the hands of buyers. This could lead to a ripple effect, potentially lowering home prices.

Mortgage Options

First-time buyers now have more mortgage options than ever before. Government-backed loans, such as FHA and VA loans, can reduce the cost of a down payment. Additionally, innovative financing options like shared equity programs and rent-to-own arrangements are becoming more accessible, offering diverse paths to homeownership.

Long-Term Trends: Seasonality and Home Value Appreciation

Seasonality

The housing market fluctuates with the seasons. Demand typically peaks during the summer months when the weather is favorable, schools are out, and families are more likely to move. House prices tend to rise by 16% from April to June and slow down by October, reaching their lowest activity from December to February. If your timeline is flexible, buying in the off-season can give you more bargaining power and less competition, potentially saving you 5-10% on the price of a property.

However, regional differences exist. The Midwest experiences significant seasonal fluctuations, while the West and Northeast see less pronounced changes. Understanding these trends can help you maximize your savings.

Home Value Appreciation

Homes have consistently increased in value, making real estate a reliable investment. Except for the post-crash period between 2008 and 2012, house prices have appreciated steadily since 1992. Recent data from December 2023 shows a 6.4% year-over-year growth.

Investing in a home offers strategic financial benefits. It diversifies your investment portfolio, reducing overall risk compared to stocks and bonds, which are more volatile. Building equity in your home provides financial flexibility, allowing you to leverage home equity loans, lines of credit, or cash-out refinances for various needs, including home remodeling or debt consolidation. These loans can even offer tax benefits if used for renovations.

Navigating the Home Buying Journey

With the right knowledge and professional advice, you can take control of the home buying process. Stay updated on market developments and learn how to leverage them to your advantage. Selecting the right realtor or broker is crucial, as they can deeply understand your market and guide you effectively.

For most, the journey starts with a mortgage. Rocket Mortgage, America's largest mortgage lender, comes highly recommended by 90% of its clients. They offer expert guidance 24/7 and remain supportive throughout your repayment process. In today's tough climate, Rocket Mortgage is offering a $1,000 lender credit to Sherwood readers who lock in a loan using their link. If 2024 is your year to buy a home, Rocket Mortgage can help you make it possible.

Start your application today and take the first step towards owning your dream home.

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