The real estate market has certainly experienced some volatility over the past few years. From the beginning of the pandemic where home showings in person were not even feasible, to “the great relocation” which saw many Americans working remotely and moving to the suburbs. Fast forward to the present time and we are seeing high home prices, high inflation and rising interest rates providing significant headwinds for the housing market. Looking ahead to 2024, there are a number of issues affecting real estate in 2024. Here are some of the top issues to watch:
Issues affecting real estate
1. Rising interest rates and inflation
The Federal Reserve is expected to continue raising interest rates in an effort to combat inflation. This will make it more expensive to borrow money, which will have a cooling effect on the housing market. Buyers may be less likely to purchase a home, and sellers may find it more difficult to get top dollar for their property.
2. The housing shortage
The United States is facing a severe housing shortage, particularly in affordable housing. This is due to a number of factors, including population growth, rising construction costs, and restrictive zoning laws. The housing shortage is expected to continue to drive up home prices and make it difficult for first-time buyers to enter the market.
3. The impact of hybrid work
The shift to hybrid work is having a major impact on the commercial real estate market. Companies are reducing their office space needs, and some are even vacating their offices altogether. This is putting downward pressure on commercial real estate prices and rents.
4. The rise of artificial intelligence (AI)
AI is transforming the real estate industry in a number of ways. For example, AI is being used to develop new tools for property appraisal, valuation, and marketing. AI is also being used to develop new types of real estate investment trusts (REITs).
5. The labor shortage
The real estate industry is facing a labor shortage, particularly in the construction and skilled trades sectors. This is making it difficult to build new homes and maintain existing properties. The labor shortage is also driving up wages, which is adding to the cost of housing.
6. Political unrest and the global economy
Political unrest and the global economy can also have a significant impact on the real estate market. For example, the war in Ukraine has caused energy prices to rise, which is putting upward pressure on inflation and interest rates. This could lead to a recession, which would have a negative impact on the real estate market.
Sustainability is becoming increasingly important to real estate investors and tenants. Investors are looking for properties that are energy-efficient and environmentally friendly. Tenants are also looking for properties that offer sustainable features, such as green space, bike lanes, and access to public transportation.
The real estate market is facing a number of challenges in 2024. However, there are also opportunities for those who are prepared. By understanding the top issues affecting the industry and taking steps to prepare, home buyers, sellers, and real estate professionals can continue to succeed in the coming year.
As always, a local and knowledgeable real estate professional will be your best resource to guide you through the upcoming housing market. Are you looking to buy or sell property in South Florida? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download the free Florida Home Search app for your smartphone or tablet.