RTRG: 2024 Real Estate Predictions
COMPREHENSIVE INSIGHT FROM OUR EXPERTS AT BOLST
As we embark on 2024, the world of real estate, including market dynamics and interest rates, is set to take center stage. Questions like, "Will interest rates drop?" or "Is the market headed for a 'crash'?" have been buzzing, especially since the rollercoaster of 2020. Real estate concerns have become viral topics on social media and news outlets, creating a swirl of speculation.
However, amidst all the noise, obtaining accurate and professional insight has proven to be quite the challenge. We've enlisted the expertise of our Brokerage Founder and CEO, Justin Landis, and our preferred lender at Ameris Bank, Mark Daker. Together, they bring a wealth of knowledge to provide you with a comprehensive guide to navigating the potential real estate landscape in the upcoming year.
Market Trends: A Dynamic Year Unfolds
Anticipated Trends
In the early months of 2024, heightened buyer activity and increased sales are anticipated, according to Justin Landis. “I think early 2024 [will be] really active with higher buyer activity and sales than the same period in 2023. The lower transaction volume in 2023 has likely led to some pent-up demand … lower interest rates coming into the year will open the door for those transactions. I also think that there is a general feeling that rates have peaked and if rates drop substantially, we could see bidding wars and price increases. It's yet to be seen if this will happen, but the overall sentiment and environment looks better than Jan 2023.”
Potential Outcomes
The possibility of bidding wars and price increases loom if interest rates drop substantially. This uncertainty creates an overall optimistic sentiment, suggesting potential opportunities for both buyers and sellers in a market that may be on the brink of positive shifts.
2023 Notes
“In 2023 we saw a large increase in the number of investment properties that were purchased as a percentage of overall sales.” Says Mark Daker. “However, unlike prior years, where the majority of investment properties were sold to institutions, 2023 saw private individuals make up the majority of investment property purchases. Investors tend to be less rate-sensitive since they're usually looking at the greater profit picture of the property. In addition, they're not as payment sensitive since rental rates have increased with interest rates, which kept net investor profits similar to prior years, despite the higher rate environment. With rental rates still being high enough to make many properties work, limited housing inventory, and home prices being too high for many buyers, I expect investors to continue to make up a relatively large percentage of the market.”
CHALLENGES AND OPPORTUNITIES: NAVIGATING THE PATH AHEAD
Bidding Wars and New Construction Trends
There could be potential impacts of rate drops. There is the risk of an influx of buyers who have been waiting for this scenario, causing bidding wars. We also anticipate the continued popularity of new construction homes with builder incentives, that may challenge traditional lenders.
From a Lender’s Perspective
“The market in general, and certainly everyone in the real estate industry, is hopeful that 2024 brings lower interest rates.” Begins Mark. “Foremost, lower rates tend to benefit the broader economy, as lower rates create more business opportunities in all industries, generally better employment markets, more disposable household income, a reduction in the gap between the cost of living and wages, and the opportunity for savings and wealth creation vs higher debt levels.
These factors, and many more, all play into the vigor of the real estate market and go beyond the obvious challenges of buyers transacting at higher interest rates. There's an old Wall Street saying that only 2 things drive the market: fear and greed. Real estate tends to follow this adage directly. Assuming rates fall, I believe there will be a significant number of hesitant buyers who are holding out for rates to fall further, fearful they're buying too early. However, housing supplies have not materially increased during this most recent slowdown, so housing prices are primed to move up quickly, should lower rates provide the fuel and the desire then for home buyers to cash in and/or catch a rising market sets a flame to that fuel.
Motivating buyers to understand that no one calls tops and bottoms in any market accurately over time. Helping buyers understand that finding a good home, with a good interest rate is almost always better than not owning at all, at least over the course of time. This will be a mark of a good real estate/mortgage advisor in 2024.”
In Conclusion
As we navigate the complexities of 2024, the Raegan Thorp Real Estate Group is poised to make it a success for their Clients. The interplay of market trends, technological advancements, and regional dynamics, will require a strategic and informed approach. Our team is committed to guiding you through this journey, ensuring your real estate experience is not only successful, but also tailored to the unique nuances of your current situation. Should you have any questions or seek personalized advice, please feel free to reach out!