2024 Predictions for Real Estate Investing
December is the month when Real Estate Investor pundits make predictions for the year ahead. We’ve gathered the crystal balls from our favorite sources, and no surprise they don’t all align. (Although one thing they do agree on: SFRs are an attractive investment for 2024.) In the ever-changing world of real estate, it’s critical to stay informed and to hear perspectives. So, read on!
The Great Renovation will continue into 2024. The prime remodel years for homes will rise into 2027, with 24 million homes ripe for major renovation.
Existing inventory will absolutely require major renovations that homeowners have not wanted to tackle. Investors, most of whom are solopreneurs or local small businesses, are better equipped than institutional investors or homeowners to tackle these major repairs and renovations because they are nimble and know their local markets.
Realtor predicts the 10 hottest housing markets in 2024. Toledo tops. Surprisingly, half the cities in the list are in famously expensive California.
Realtors Top 10 Housing Markets
- Toledo, Ohio
- Oxnard/Thousand Oaks/ Ventura, California
- Rochester, New York
- San Diego/Chula Vista/Carlsbad, California
- Riverside/San Bernardino/Ontario, California
- Bakersfield, California
- Springfield, Massachusetts
- Worcester, Massachusetts/Connecticut
- Grand Rapid/Kentwood, Michigan
- Los Angeles/Long Beach/Anaheim, California
Zillow predicts that flippers and traditional home buyers may be after the same homes next year.
Typically the target of home flippers, homes that need a little work before they qualify for “dream home” status will have increased interest from buyers shopping for their primary residence. Inventory has been far below normal for a while, and though Zillow predicts more homes will hit the market in 2024, inventory will remain much lower than pre-pandemic norms. Faced with limited choices, buyers will be willing to overlook small flaws, such as an outdated bathroom or kitchen.
Financial Samurai suggests home prices are heading back up.
After a ~10% decline in the median 2023 home price in America according to the St. Louis Fed, I believe there will be a rebound in 2024. Therefore, I expect home prices to go up by more than 0% in 2024. I could stay conservative and forecast between a 1.5% – 2.8% price appreciation. However, I’m going to go out on a limb and forecast a 4.5% median home price appreciation for 2024.
Deloitte’s survey of 750 chief financial officers in global real estate indicated gloom about capital, but SFRs were spared.
More respondents than ever expected fundamentals to worsen. About half expected both cost and availability of capital to worsen for them in 2024, jumping from 38% last year to 50% this year for worsening cost of capital, and from 40% to 49% for less capital availability.
When respondents were asked which property types present the most attractive risk-adjusted opportunity over the next 12 to 18 months… Single-family rentals (SFRs) and build-to-rents (BTRs) jumped five spots to come in second [after Data centers].
Redfin predicts home prices will fall, new listings rise, and sales will increase.
Prices will fall 1% year-over-year in the second and third quarters, when the home-selling season is in full swing. That will mark the first time prices have declined since 2012, when the housing market was recovering from the Great Recession, with the exception of a brief period in the first half of 2023… As a result, “Home sales will increase and end the year up 5%.
BiggerPockets On The Market podcast sees ups and downs, but puts its money on the Midwest for 2024.
“It’s one of the most affordable housing markets in the country, and parts of the region are seeing steady population growth,” says host Dave Meyers, who recommends focusing on growing areas, as not everywhere in the Midwest is a good location for real estate investing.
James Dainard advises investors to look away from luxury housing and toward affordable single-family fix’n’flips: ‘‘Don’t go custom, don’t go high end. Stick with the masses, and make sure that you can market to the most amount of [the] buyer pool.’’
Henry Washington suggests the big wins will come in‘‘unsexy big cities,’’ such as Cleveland and Columbus, Ohio, and Indianapolis. These cities are slightly more affordable than the traditional urban destinations, but have robust job markets and good housing supply.
Forbes sees changing demographics, particularly the preferences of millennials and Gen Z, are shaping the market.
The real estate market in 2024 is expected to evolve significantly from changing demographics, including the aging of baby boomers and the home-buying habits of millennials and Gen Z, which will influence the types of properties in demand. Millennials and Gen Z are looking for housing options that align with their lifestyle choices and values, such as walkable communities, access to amenities, and flexible living arrangements.
Although adult Gen Zers (ages 18 to 25) account for an average of 14.91% of potential homebuyers across the nation’s 50 largest metros, that figure will likely grow over the coming years as the younger members of the generation begin their adult lives.They have been flocking toward more affordable parts of the country, like Virginia Beach, Virginia, and Cincinnati, while Millennial buyers are more prevalent in job centers like New York, Seattle and Philadelphia.
The NAR says that green and sustainable properties will gain more traction, with investors focusing on energy-efficient and eco-friendly homes.
With growing environmental concerns, properties integrating sustainability features like solar panels, energy-efficient designs, and eco-friendly materials are gaining traction. Buyers increasingly prioritize homes that reduce their carbon footprint and offer long-term savings on utilities.
This evolution is expected to shape investment decisions and construction practices. Sustainable homes do a better job of withstanding extreme weather, are fire-resistant, and curb termite damage, wood rot and mold. Energy-efficient homes help residents save up to 35% on their electric bills and cut 40% of waste since the frame is formed in a factory. These homes have lowered carbon emissions by 50% against the industry average, proponents say.
Source: National Association of Realtors
