2024 Real Estate Predictions

From Saucetown Properties.....

Happy 2024 and thank you to everyone who has followed our Saucetown IG page. To begin 2024, I will be launching our Substack with my 2024 housing market predictions. I’ll be writing a minimum of once a week on here not just about real estate, but also life, culture, travel, what I’m reading, or anything else on my mind. Needless to say (but I’ll say it), none of these predictions should be misconstrued as investment advice or treated as anything other than something that I am doing for fun. No one (not even the fast talking guy on Instagram trying to sell you his “proprietary system” for the one time low price of 30 grand) knows what the market is going to perform. What I will do, is circle back on these at the end of the year and see how I did. Without further ado…..

1. Mortgage Rates will end 2024 below 6%

   -This will happen, but not because of the fed cutting massively (as the economy is strong). Instead, it will be due to the spread between the 10 year treasury and mortgage rates narrowing to more normal historic levels (current spread is in the 270s, historic average is 175) . Personally, I think the 6% range is a pretty healthy place for the market.

2. National home prices will appreciate between 3 and 4%

   -2020-2022 were wild years. The gains we experienced during Covid are by no means normal. Expect more of an average year (similar to 2023). Worth noting, housing is regional. This means not all markets will appreciate at the same rate. And on that note……

3. The Salem, OR metro area will appreciate at a rate above 5%

   -What can I say? I’m bullish on The Sauce, but not blindly so. I live in NYC, but come to Salem a few times a year. Every time I go I see a city that is on the rise. The revival of downtown is startling. The higher end apartment development is something I couldn’t imagine 10 or even 5 years ago. The city still has a great base of government and hospital jobs. Oh, and did we mention Salem Airport is back up and running? Saucetown to the moon.

4. The number of realtors in America will come down….again.

   -Per the NAR (National Association of Realtors), 2023 was the first year since 2012 that the number of realtors in America decreased YoY. I expect this to happen again in 2023. The job becomes much harder when rates are higher and supply is lower. 2021 and 2022 were goldilocks years for the realtor industry where you could list and have 20 offers over a weekend. Those days are over and the easy money has been made. The career realtors will survive and do well, the hobbyists will not.

5. The Commercial Real Estate meltdown that everyone is predicting will not happen.

   -I’ll start this with a caveat, but in many ways you could say a “meltdown” is already happening in certain cities (such as SF) where buildings are being sold for pennies on the dollar. With that said, I do not expect it to happen on a national level. Typically in economics, the biggest risk is the one that you don’t see. This one has been telegraphed for a long time and we generally have a way of working our way through it (through financial ingenuity or otherwise) if we know it’s coming.

6. The Midwest will continue to appreciate at well above the national level.

   -3% interest rates are a thing of the past. Even if my prediction of sub 6% interest rates comes true, we are still in another stratosphere from 3%. Know who is less impacted by high interest rates? Cheaper markets like those in the midwest. I’m very bullish on Green Bay, WI (has nothing to do with my love for the Packers or the fact that I own a place there *wink*).

7. Things will (unfortunately) not get much easier for younger buyers.

   -Did you know that about 40% of the homes purchased in 2023 were from cash buyers? The Boomers are freakin LOADED and younger buyers are outgunned badly when it comes to buying a home. High interest rates don’t help the situation, as cash buyers do not care about interest rates but buyers who need a mortgage are extremely interest rate sensitive. Couple that with a low supply and it continues to be tough sledding for younger buyers. Which takes us to my final prediction……

8. More people who used to be buyers will chooser to be renters.

   -As a guy who rents the place he lives in but owns many rentals, I’ve been preaching this for a while. YOUR PERSONAL RESIDENCE IS NOT AN INVESTMENT (rentals are a different story). Look for more people to be cool with renting and decide to take what would have been their down payment + their savings from renting instead of buying and spend it on vacations, events, etc.

Thanks for reading folks! I look forward to providing a new piece at least once a week going forward. Please feel free to comment below. I invite disagreement (or agreement) and discussion. Best of luck to everyone in 2024!

-Matt