The United States real estate market has been evolving in 2024 with a blend of uncertainty and cautious optimism. Amid fluctuating economic indicators, maturing homeowner tastes, and groundbreaking technological advancements, stakeholders keenly observe how these elements will shape the landscape. Read on to learn more about the Emerging Trends in Real Estate 2024.
7 Emerging Trends in Real Estate 2024
The real estate sector is experiencing rapid change. Due to several macroeconomic factors, such as interest rates, inflation, and employment trends, the market is at an intersection. The Federal Reserve's monetary policy plays a pivotal role in influencing mortgage rates and overall affordability, influencing probable buyers and investors to monitor the market closely.
Here are a few top trends impacting the real estate industry 2024 and beyond.
1. Pursuing House Search Online
The Internet has transformed the hunt for houses. Home buying and selling has become more affordable, efficient, and convenient. There are many ways to search for houses nowadays.
Online listings: When you browse websites like Google, Facebook, or Zillow for houses, you can find numerous listings, many of which you can view from your home or any comfort zone at any time.
Virtual tours: Virtual reality and 360-degree viewing have made seeing a house from different angles more convenient than ever. You can visualize yourself living there, enabling a more fascinating experience for you and the potential homeowner.
Real estate apps: You can track the advancement of your search, save properties for easy access, and even receive communication when a new house matching your standards comes on the market.
Online ads: People today look to digital ads rather than traditional print ads as they are more engaging, customizable, and cost-effective. It is one of the feasible ways to highlight the unique features of a property.
2. Migrating To The Suburbs:
Though it started a little earlier, the pandemic in 2020 triggered a more significant number of Americans to move to the suburbs. Most Americans choose to stay closer to home, moving out of states and cities since the pandemic, and the trend continues. They moved from the city into the surrounding metro area to grow small communities rapidly. The reasons behind the shift include
Lower housing prices: Homes are more affordable in the suburbs than in the city. Although more Americans are renting than ever, most still want a single-family home. Prices in urban areas have risen so high that for most people, moving to the suburbs is the only option to buy an affordable house.
Larger living space: Most cities are densely populated and have restricted space. In most areas, a one or two-bedroom house costs as much as a three or four-bedroom house in the suburbs. Suburban homes typically have many perks like a backyard, garage, deck, or patio ‒ unavailable to most city dwellers.
Urban decay: Many residents feel unsafe because of the rise in homelessness, violent crime, and vandalism over the past few years. Though local governments are moving quickly to address these issues, people prefer to leave and resettle somewhere quieter.
Closer to nature: People realize the need for greenery and life in the suburbs only can ensure greenspace with less pollution. Though cities invest in parks, the suburbs offer better access to nature. After staying indoors during the pandemic, Americans are looking toward communities that provide outdoor recreation opportunities.
Better luxuries: Many segments of urban life, especially its amenities are now available in the suburbs ‒ restaurants, cafes, clothing boutiques, craft breweries, cultural attractions, etc. ‒ echoing the fancies and expectations of people who have grown up with them in the city.
Remote Work: Migration to the suburbs spiked during the pandemic. As businesses expanded remote work opportunities, employees felt free to live wherever they wanted and moved to the more affordable suburbs. However, the population increase is escalating the housing prices in suburban communities.
3. Shift To The Sun Belt
Since the pandemic, residents preferred the Sun Belt for migration and settlement. The continuous growth in the U.S. Sun Belt has been an incredible boon to commercial real estate investors. The region stretches across eighteen states in the Southeast and Southwest, from California to South Carolina and Florida. It includes seven of the ten largest U.S. cities and many midsize metropolitan statistical areas (MSAs). The trend will continue, and the reasons behind it are
Lower Taxes: An increasing number of organizations are in the Sun Belt. The private sector boom is mainly due to the fewer and less onerous taxes and regulations. The lowered State and Local Tax (SALT) and mortgage interest deductions are not favorable to homeownership in most high-cost states.
Financially solid growth: As businesses expanded, they have created more opportunities, such as faster jobs, GDP, and wage growth in most metro areas, far above the non-Sun Belt and other USA averages. Muffled financial growth, high housing costs, pollution, and outdated infrastructure can aggravate options for states outside of the Sun Belt.
Younger workforce: Nearly 50 % of the total nonfarm and office-using jobs are in the Sun Belt. Besides, more than 50% of Millennials nowadays live in the region. With the increase in Millennials in the workforce, Sun Belt markets will continue to grab more jobs as their younger inhabitants grow.
4. Demand For Single-Family Housing Creates Shortages
Since the pandemic, there has been a tremendous increase in the construction of housing units in the South, mainly single-family homes, which raised hopes that the housing shortage looks conquerable in most cities of the country. The market for single-family homes is increasing, but the high interest rates still hurt potential homebuyers. After the pandemic, millennials also want to purchase their first home, evoking suburban growth. They are changing the ways of house hunting, forcing the realtors and agents to adapt to their evolving demands.
Use of technology: Millennials use their phones or laptops to search for homes online and get helpful information. Most want to view 3D virtual tours and digital floor plans when shopping for a house.
Written communication: Millennials prefer texting messages to using the phone to get information about a house, schedule an appointment, or ask questions. They also expect the agents to provide them with features like live streaming and videos instead of traditional photographs.
Homes closer to the work area: Millennials care about finding housing near their workspace. While some list commuting costs as a critical consideration, others look for a convenient location for their job as an essential factor when picking a neighborhood, and some list overall affordability as vital.
5. Rising Home Prices:
Residents looking to buy their first home plan well in advance and save for the down payment. They search different houses in excitement as they visualize their dream becoming reality. However, reality sets it as they finalize an agent and scroll through some of the listings available in their budget. It disappoints them as they realize the homes are far lower than they visualized. Their dream house is much costlier than they imagined. Understand the factors that drive up the home prices.
Limited housing inventory: The law of supply and demand is in full effect. People want to purchase a home, but there aren't enough homes on the market. As mentioned above, the pandemic, inflation, the influx of millennials, the housing market, and rising mortgage rates have all worsened the shortage. Investors have been purchasing properties, adding to the already stiff competition.
Mortgage interest rates: Mortgage rates hit a record low during the pandemic, turbocharging home sales and refinancing. But today, the situation is different, with much higher rates. Many homeowners are forced to halt their decision to list their homes for sale.
Inflation: Over time, rising prices for goods and services significantly impact home prices. With inflation, consumer purchasing power decreases as it affects the cost of everything—construction costs, materials, and labor, increasing building costs significantly.
6. Uncertain Mortgage Rates:
The general consensus among industry professionals is that mortgage rates will slowly decline in 2024. The projected decline started in May and reached below 7%. The unexpected rise in mortgage rates previously worsened affordability challenges, and now agents hope that the home-buying spree will start soon.
Though purchases of newly built homes are flourishing, sales of existing homes with the maximum housing market share have stagnated. With mortgage rates falling, it is a good time for spring home buyers to start their hunt. The same issues, as mentioned earlier, continue, with supply not coping with demand and the high prices. Though the mortgage rates have come down a little, they are still higher than in previous years. So, it is still unclear whether the real estate market will stagnate or recover.
7. Decline In Rental Property Market
Rents in the U.S. have dropped over the past eight months to a year. Yet, rents are higher than they were before the pandemic. It is not that rentals are more expensive, but states across the country are genuinely losing the number of apartments that are considered as low-rent. The gap between what people earn and how much their housing costs is widening alarmingly. At the same time, there is a severe shortage of homes, especially those affordable to people with the lowest incomes.
Conclusion:
The outlook on affordable housing is bleak for those searching for a place to stay. Though house hunting has become easier because of digitalization, the government must look at ways to bring down rents or make things more affordable for people at the bottom. They must focus not only on the shortage of housing units but also ensure they make available homes for low- and moderate-income people.
You can fill out our quick pre-approval form or contact us by calling 888-276-6565 or emailing info@alphatechlending.com.
Commentaires