As we enter 2024, the U.S. real estate market stands at a crossroads, with equal numbers of pundits and YouTubers forecasting a market crash while others predict a new run-up in housing prices. Marked by a complex interplay of economic challenges and technological innovations, the 2024 outlook is murky at best.
The aftermath of COVID-19, surging home prices, and the revolution in remote working have reshaped the housing market's fundamentals. This period of upheaval has laid bare the pressing issues facing buyers and sellers alike: affordability crisis, inventory shortages, and a seismic shift in where and how people choose to live.
As the Chief Operating Officer of
The Past Years: Turbulence and Transformation (2020-2023)
Although the dramatic increase in home prices has been the overarching trend for the last 10 years, the real estate market has experienced the most significant turbulence over the past three years.
The onset of COVID-19 in 2020 marked a turning point, particularly impacting the secondary market, which comprises most of the U.S. real estate transactions.
Pressure from the secondary market led to increased demand for new construction homes as buyers sought new, efficient, and environmentally friendly options. Despite the demand, supply chain issues and labor challenges meant that builders simply couldn’t keep up with the volume of buyers, and many builders would sell out neighborhoods before they even broke ground.
Prices across the board spiked as “FOMO” and low interest rates drove housing prices ever higher.
Of course, 2023 brought the cool-down that had been predicted for several years. As interest rates climbed, buying power fell, and homes were pulled off the market. Sellers were unwilling to accept lower prices for existing homes and were loath to give up their 3% interest rates.
Home prices fell, dramatically in some areas, and the total number of homes sold fell to record-low levels.
The U.S. Real Estate Market in 2024: Trends and Predictions
So where are we headed in 2024; should buyers hold off, or is now the best time to buy? Should sellers move while demand is still strong? Let’s sort it out.
- Pricing Rationalisation: Redfin
predicts a return to normalcy in the market with slightly falling home prices and an increase in new listings. This is a welcome change from the recent high prices and limited inventory that have characterized the market. This trend reflects what we've seen at NewHomesMate, where the demand for new construction homes rose sharply during the secondary market's stagnation.
- Increased Inventory: As sellers begin to accept the new normal, many that were holding off will re-enter the market and list their homes. Most of these will be owners that have to sell, whether for work, family changes, or other compelling reasons. We do not expect a “flood” of new listings as many potential sellers will simply remain in place rather than give up their super low interest rates.
- Interest Rates Fall: It doesn’t take a crystal ball to determine that we are likely past the “peak interest rate.” The Fed has signaled that they will hold the interest rate flat or continue to lower it over the course of the year. We expect to end the year somewhere near 6%. New construction buyers will continue to benefit from builder programs that can reduce the interest rate well below market levels.
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Continued Demand: Despite near-constant construction, new-home inventory has still
failed to keep pace with demand over the past decade. New housing startsjumped 40% year-over-year in November, and even that increase won’t cover the existing demand. The solid economy, falling interest rates, and strong demand will keep the market stable in 2024. -
Government Involvement. Evolving policies to improve housing affordability, such as subsidizing down payments for first-time homebuyers and changing zoning restrictions will likely have political, but little market impact in 2024.
Other Factors Affecting Real Estate in 2024
The stabilization of the housing market, with expected lower mortgage rates and prices, is a positive sign for buyers and sellers. This trend, anticipated by
- Questions remain about the commercial real estate market and the impact of the empty offices. While the Fed has signaled they will purchase some of these assets, some banks may face liquidity concerns that may impact consumer lending. Based on what we have seen, we are not worried about this in 2024.
- The “soft landing” of the economy is still a question mark in the eyes of many. With layoffs at some major employers, the idea of a hard landing isn’t off the table in 2024. Regional layoffs will have a local impact, of course, and we expect some of this in 2024.
- On the positive side, recent antitrust lawsuits against the NAR and local affiliates mean that we will likely begin to see decreased costs associated with home purchases.
- The prop-tech sector's emphasis on profitability and innovation will be pivotal for the industry's growth. Technologies such as AI will begin to transform real estate transactions, making them more efficient and user-friendly. We have also leveraged these technologies to streamline the home-buying process, a trend likely to become increasingly prevalent in the industry.
We are committed to staying at the forefront of these changes, continuously adapting our strategies and focusing on innovative solutions. Our mission is to simplify purchasing new construction homes, making them more accessible and enjoyable for our clients.
As we navigate the evolving landscape of the U.S. real estate market in 2024, our focus on innovation, customer-centric solutions, and market adaptability will guide our efforts in helping more individuals achieve their homeownership dreams.
In conclusion, as we look towards 2024, the U.S. real estate market is at a crossroads of evolving challenges and emerging opportunities. The landscape is being reshaped by innovative technologies, shifting market dynamics, and evolving consumer preferences.
This environment demands adaptability and a keen understanding of the market's nuances.
The article uses data and materials from the following sources:
- “Redfin Predicts 2024 Will Be the Year Homebuyers Catch a Break, With Home Prices Falling and New Listings Rising,” Daryl Fairweather, Redfin News, https://www.redfin.com/news/housing-market-predictions-2024
- "WHERE HASN'T HOUSING CONSTRUCTION KEPT PACE WITH DEMAND?", Alexander Hermann, The Harvard Joint Center for Housing Studies, https://www.jchs.harvard.edu/blog/where-hasnt-housing-construction-kept -pace-with-demand
- “Home building surged in November as mortgage rates came down,” Anna Bahney, CNN, https://www.cnn.com/2023/12/19/business/home-building/index.html
- "Housing Market Forecast: 4 Expert Predictions for 2024", Leslie Cook, editor Julia Glum, Money.com, https://money.com/housing-market-forecast-2024
- U.S. Census Bureau