2024 is set to bring several changes in contrast to the stagnation of the real estate market of the last period. Christy Budnick CEO, Berkshire Hathaway HomeServices highlights that: “The number (inventory) of available properties is increasing in many of our home markets and interest rates are trending slightly lower. The combination, although achieved slowly, serves to create a balance between demand and supply."
The report goes on to unveil that a current market characteristic is that many people are choosing to stay in their residence, refurbishing their homes, rather than moving, as a result of which some homes tend to have a higher resale value. At the same time, the fact is presented that now the younger generation of buyers chooses a house that is renovated and ready, so that they can move in immediately. This can be an incentive for a property to be renovated before it is sold.
According to Christy Budnick CEO, Berkshire Hathaway HomeServices: “The supply-demand balance varies from market to market and property type to property type. The market for first-time home buyers and single-family homes remains important after several years of frenetic activity. However, the market forces that exist now existed long before 2020, with some stemming from the housing crisis of 2009, the so-called housing crisis.
As for inventories and what's keeping them so low, the answer lies in the shift in interest rates that has had an outsized effect on the housing market as, for the first time, we're talking about a new generation of first-time home buyers. However, the market forces that do exist have existed long before 2020, with some stemming from the 2009 crisis. The shift in interest rates has had an outsized effect on the housing market for first-time home buyers. Homeowners who bought or refinanced at 2.5% or 3% are staying put because moving would mean jumping to a nearly 7% rate. The lack of inventory, both from resales and new construction, is leading to monumental competition for affordable real estate.
According to The National Association of Realtors® (NAR): "Regardless of tight market conditions, prospective homeowners should not be deterred from entering the market." The typical first-time homebuyer in 2023 was 35 years old, firmly in the millennial generation, while the percentage of buyers with children under 18 fell to an all-time low of 30% from a high of 58% in 1985. There was also an overall decline in birth rates and people having children later in life. While another characteristic that affects real estate markets is that buyers differ depending on the geographical area.
Finally, another difference over the years is in customer service, as customers have more information at their fingertips than ever before and enter the transaction process with much more knowledge on the subject.
