Lisa Mailhot | January 29, 2024
The real estate market of 2024 presents a unique landscape, shaped by contrasting trends in existing-home and new-home sales. As we delve into these trends, it's crucial to understand the driving forces behind them and the opportunities they create for savvy market participants.
Last year marked a distinctive period in the U.S. housing market, witnessing the lowest level of existing-home sales since 1995, coupled with an 11% increase in new-home sales. This pattern, highlighted by Zonda Chief Economist Ali Wolf at Inman Connect New York, is expected to continue through 2024.
Affordability remains a significant hurdle, with many potential buyers experiencing what Wolf terms an "affordability shock." Despite avoiding a recession last year and seeing positive economic movements, the high prices and limited inventory are key challenges in the housing market.
Interestingly, Wolf points out that over 4 million homes were still sold last year, emphasizing the importance of understanding current consumer behavior and preferences. These insights are vital for real estate success in 2024.
Mortgage rates, though retreating from their 2023 peaks, continue to impact affordability and total sales. Inventory shortages remain a critical issue, with significant variations across different markets. For instance, listings in cities like Austin and San Francisco exceed pre-pandemic levels, while others like New York and San Diego have seen substantial declines.
Zonda, a housing data and consultancy firm, offers a unique perspective through its Market Ranking system, providing insights into the pace and volume of new home sales in various markets. This data is crucial for understanding where opportunities lie, especially in markets that are outperforming historical trends.
The role of new homes is increasingly significant, now representing about 30% of the market, compared to the historical average of 10-15%. This shift offers opportunities, especially for consumers looking to avoid renovations or seeking customization options. Zonda's research indicates that 75% of builders plan to increase their output this year, conditional on sustained demand.
However, challenges remain, particularly in areas like the Southeast, where a surge in rental community completions might impact market dynamics. Moreover, the demographic of buyers is shifting, with Baby Boomers, benefiting from accumulated wealth and property appreciation, becoming more active in the market.
The real estate market of 2024 is a tale of two segments, each with its unique challenges and opportunities. Whether you're a buyer, a seller, or a real estate professional, understanding these dynamics is key to navigating the market successfully. If you're considering a move in Orange County, let's connect and explore how these insights can benefit your real estate journey.
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