For real estate businesses, the plan differs from the previous year when the war was simple: reposition your business according to the current risks for some time to sustainably grow and improve returns. The situation has changed because industry leaders have anticipated emerging real estate trends in 2024. They think that no U-turns are there, which were before the pandemic.
Real estate experts say many people are not returning to their offices soon. It can affect office owners, real estate brokers, and other stakeholders. This impact will be more prominent in the nation’s downtowns and other significant areas. It means real estate businesses can face some challenges in 2024. These challenges are related to the vibrant office market. So, the real estate trends 2024 are different from the previous years. here you also learn about emerging trends in real estate 2024.
More Office Places Are Vacant: A New Real Estate Trend in 2024
As we have already discussed, many people will not come to the office soon, meaning more office places will be available. The numbers confirm that the direct office vacancy rate is higher when we compare the second quarter of 2023 with the 4th quarter of 2019. In the downtown, the difference is 73%.
On the other hand, the difference in suburban areas is 32%. This percentage was 10% in the last quarter of 2019 and 17.3% in the second quarter of 2023. For downtown and suburban class A only, the difference is more significant, which is 81% and 47% change, respectively. All this data has been taken from Nelson Economics Analysis of Colliers International Data.
What is the news for the real estate sector?
The interest rates will be higher in 2024, and no one expects these rates to lower. It means there will be more real estate buyers in the market. Investors can jump into the market and acquire new assets. However, the issue is that transactions are down even though equity is available in the market. Many instances have confirmed that buyers and sellers disagree on the prices, and the dearth of sales limits also forces the need not to confirm the property rates.
When discussing the positive changes in the property market, the real estate trends in 2024 confirm that the interest rate hike will stop in 2024 due to the highest inflation rate. learn about What is Real Estate and How real estate work
Although obtaining credit is challenging due to economic headwinds, we can confirm that high-quality properties are available in the market, making investors and tenants interested. However, before deciding anything, real estate firms must develop their growth strategies and succeed even when the interest rates peak.
Key Themes Observed from Real Estate Trends 2024
Apartment Construction on the rise
As the offices are no longer needed, the repurposing of high-vacancy office buildings is rising. For example, the construction of apartments has been increasing since the pandemic. According to RentCafe, between 2020 and 2022, over 700,000 apartments were constructed. When we estimate the number of apartments only built in 2023, 460,000 apartments are constructed. It means 1.2 million units were added to the apartments after the pandemic.
Debts are less available.
If you want to sell your home in the United States of America, you can confirm that customers are not available in large numbers. It affirms that debts or credits are not readily available. This situation developed in March 2022 when the interest rate started gaining. It is one of many issues, as the available credits are expensive. Moreover, the borrowers have been facing issues paying their debts, increasing CRE debt. This situation has forced the banks to grow their books even when they issue fewer loans than in the past.
Higher rates make housing unaffordable.
When exploring housing affordability, it has fallen drastically and is at its lowest in 30 years. The reason is that we buy houses much more than in the past. Moreover, rental housing costs have also soured tremendously. The situation has become more severe for home buyers because they cannot buy homes at the rates they could buy before the pandemic. The solution is to build new housing projects that will increase the supply of houses to the market, benefiting homebuyers. However, those who are selling their homes may suffer in this situation.
Reluctance in Accepting AI for the Real Estate Sector
The latest changes in artificial intelligence, especially related to generative AI, have affected many industries, and there is no difference for the real estate sector. However, when exploring the latest real estate trends 2024, we identify that the real estate experts have not adopted it entirely, although the homebuyers can find their favorite properties conveniently.
However, we have identified that AI technology’s capabilities and functionality are unknown to many real estate business owners. The reason behind this reluctance is the misinformation about AI. To combat this misinformation, real estate experts need to explore the topic and learn how they can benefit from technology. Technology becomes more critical for those real estate firms with large data sets because they need to protect personal and sensitive information to develop trust and keep the clients intact.
2024 US Real Estate Markets to Watch
Interestingly, there has been no significant shift in the market preferences after the pandemic, although we have experienced some significant changes in the real estate market. People still believe that the regions in the southern third of the United States are still the “smile” markets.
According to the market study, Nashville is the best real estate market for those who love buying homes and other properties in the US market. Super Sun Belt, 18-Hour Cities, Supernova, Knowledge and Innovation Centers, and Multi-talented Producers are those markets where there is still the potential to invest and buy properties. So, if you want to buy homes or invest in real estate, these markets are the best.
An established fact is that the real estate trends 2024 will be like those after the pandemic. The only uniqueness is the low interest in office places because companies prefer keeping their employees at home and benefit from saving investments in real estate and controlling operational costs by minimizing their rental expenses. However, at the end of 2024, we can expect an uptick, and it is for sure. The reason is that the lowering of interest rates is on the cards.
If interest rates remain higher, we can expect hype in the real estate market because people will get used to higher interest rates and start real estate transactions. It is because markets cannot keep themselves stagnant, and people start believing with time that survival is possible when they begin accepting real-time scenarios and trends.
Frequently Asked Questions
Q1: Can you please identify the top real estate trends 2024?
In 2024, the real estate trends will be:
- A shift of offices from physical spaces to remote working
- Expensive buying and constructing of houses.
- Higher interest rates can affect market dynamics.
Q2: What do you expect when discussing office market changes in 2024?
More vacant places will be available in 2024. It means the demand for office spaces will decrease in the coming years. The reason is to promote remote working worldwide.
Q3: What does the increased number of apartments mean in the real estate market?
It means the demand for residential apartments is rising, especially after the pandemic. It also confirms that the real estate market is more focused on the housing needs of the homebuyers.
Q4: Can you expect the impact of AI technology on the real estate market in 2024?
We already know that AI is poised to introduce revolution in multiple industries. However, its impact on the real estate market is minimal. Therefore, a lack of awareness and misinformation about artificial intelligence will make introducing AI in real estate businesses challenging.
Q5: What do you predict after exploring the latest real estate trends in 2024?
Higher interest rates and unaffordable rental costs have affected housing affordability. It is at the lowest level for 30 years. Therefore, the real estate trends 2024 confirm that the real estate businesses must increase the supply of housing projects to assist homebuyers.
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