2024 Real Estate Market PredictionsJan 25, 2024
With 2023 Officially behind us its full steam ahead to make 2024 the BEST YEAR EVER!
Lets wrap on the Real Estate market last year with some key stats:
- Inflation ended up at 3.24%
- Interest Rates 7.24%
- Average Mortgage- $3,200
- Average Rent- $1,847
It was also the lowest transactional year in terms of volume in Real Estate.
Now with all that being said…that actually has us very excited going into 2024!
WHY? Seller Confidence
The FED has already announced Rate Cuts this year and as of time of this writing they have already dropped it once already.
What that means is, there has been so much trapped equity in homes, meaning that people got very low interest rates during the pandemic and there homes also increased in value. BUT they could not access that equity because that would mean having to refinance into a 7.5% rate from a 3.5% rate or use a HELOC at a 10%+ rate.
We can start to see this already forming as listings increased Year over Year for the first time since 2019->2020.
Typically, the amount of listings is seasonal with the winter months being slower then picking up in summer but already with this news of rate cuts, listings have skyrocketed already in Jan 2024.
Don't discount the psychological aspect of everything as well. There is a perceived light at the end of the tunnel right now in regards to rates being at its height in Dec 2023 and looking like it will come down some this year.
What we as investors ever really want is stability. The known that rates wont double and that it is stable. That allows us to make predictable decisions versus not having control.
What about Buyers?...
Same here as sellers. Buyer confidence is growing with the knowledge that you can buy now at lower prices and refinance at a lower rate later this year.
There was a lack of transactions last year, the lowest since 1995. Big institutions like BlackRock stayed on the sidelines for the most part last year but already has made a huge splash this year by acquiring Triton for $3.5 Billion and with it there portfolio of 38,000 residential homes.
This big bet shows that even the institutional buyers are pushing into being landlords for 2024 and beyond. Which leads me to my first prediction for the year:
Prediction #1- Home Prices will increase again…slightly:
Even with more listings coming to market, there is still a big deficit in supply. It should be helped a little with rates coming down slightly this year but not expecting the same amount of supply we had pre pandemic.
Because of that, I am still betting that housing prices will once again go up…slightly. My guess around 2-3% (which is normal pre-pandemic rises 🙂)
Prediction #2- Interest Rates will be in the 5.5-6.5% range
We ended at a high of 7.24%. The Fed has already announced they will cut as early as March. While not expecting major drops, at the time of writing we are already at 6.69% with more rate drops coming before the election. I wouldnt be surprised if we ended up in the 5s by end of year and that should be a healthy range for people to really feel comfortable to start transacting more.
Prediction #3- Rents Continue to Rise
As you can see from last year it is one of the biggest differences between mortgage and rent costs. The United States has an affordability issue in housing, thats no secret. We are becoming more and more like countries that have been around longer than us and becoming more of a renter nation as it is pricing many Americans out of being able to afford homes. Every 1% drop allows 5 Million more Americans to afford homes. That will no doubt help but most Americans will still be priced out of buying homes thus continue to drive more demand in rents prices. So Rents will continue to go up…slightly about 3%.
I dont have a crystal ball, these are just predictions. My strategy is still buying real estate at a good price that cash flow and hold for a long time. This is the key formula in a good, bad, or average market that always works.
Now take this data, use your own judgment and take some massive action. Have the best year ever!!!