Affected by a variety of factors such as economic cycles, interest rate policies, demographic changes and market demand, both first-time homebuyers and experienced real estate investors need to understand these new trends in order to make wise decisions.
1. Interaction between economic recovery and the housing marketThe recovery of the US economy has greatly affected the development of the real estate market. In 2024, despite the challenges of inflation and high interest rates, economic growth remains relatively stable. However, the speed and characteristics of economic recovery also directly affect the trend of the real estate market. Homebuyers and investors need to understand the relationship between the economy and the housing market.
In 2024, the United States will continue to recover from the post-epidemic economy, with low unemployment and stable wage growth, which provides a certain economic foundation for homebuyers. Although rising interest rates have affected the loan capacity of some homebuyers, economic growth has led to strong housing demand. In particular, in some areas where the technology industry is developing rapidly, such as Silicon Valley and Austin, real estate demand continues to rise, driving up housing prices in these areas.
The Federal Reserve has adopted an interest rate hike policy in the past few years to cope with high inflationary pressure. Although the Federal Reserve hinted that it might temporarily stop raising interest rates in early 2024, the impact of high interest rates on the real estate market still exists. Due to the increase in loan interest rates, the cost of home purchases for home buyers has increased, especially in first-tier cities, where many first-time home buyers feel more pressure. High interest rates have also led to an increase in financing costs for real estate investors, which may affect their investment decisions.
Changes in population structure are an important factor affecting the real estate market. The main demographic trends facing the United States in 2024 include aging, continued urbanization, and changes in young people's demand for home purchases. These factors work together to determine the type of demand and purchasing preferences in the housing market.
As the aging process in the United States intensifies, more elderly people are beginning to choose the type of housing they want to live in after retirement. For retired people, the convenience, safety, and barrier-free design of the living environment are increasingly attracting attention. In particular, in suburban and elderly-friendly communities, real estate demand continues to rise. In 2024, real estate developers and investors may pay more attention to the construction of retirement communities to provide a more comfortable and suitable living environment for the elderly.
Compared with previous generations, the younger generation in the United States faces different pressures to buy a home. High housing prices, student loans, and tight income conditions have led more and more young people to postpone their home purchase plans. At the same time, the popularity of remote work has led some people to choose to move away from expensive city centers and choose suburbs or other areas with lower living costs. This trend will continue in 2024, and homebuyers' demand will tend to shift to the suburbs, especially young people who feel pressured by high housing prices in big cities. Suburbs have become their ideal choice.
As the family structure in the United States changes, the number of single households and small families without children continues to increase. These families' demand for small and compact apartments is also rising. Especially in large cities, singles and small families prefer to buy moderately priced apartments or shared housing rather than large independent houses. Developers and real estate agents may pay more attention to this market demand and provide more small-sized homes that meet the needs of single families and small families.
Since the COVID-19 pandemic, the US construction industry has been facing supply chain bottlenecks, resulting in shortages of building materials and extended construction cycles. This problem will still exist in 2024. The rise in construction costs has had a significant impact on the housing market, directly leading to an increase in the price of newly built homes, further exacerbating the supply shortage in the market.
Due to the shortage of building materials such as wood, steel, and cement, the cost of newly built homes in the United States will remain high in 2024. These costs will eventually be passed on to home buyers, causing the selling price of newly built homes to continue to rise. Especially in first-tier cities where housing prices are already high, the increase in construction costs has further reduced the affordability of newly built homes.
The United States will still face the problem of insufficient housing supply in 2024. Due to rising construction costs, many developers choose to postpone or reduce the construction of new projects, resulting in a shortage of existing homes on the market. Especially in popular metropolitan areas such as New York, Los Angeles, and San Francisco, the supply of real estate is far from meeting the demand, which makes the housing prices in these areas continue to remain high.
Due to the difficulty of building new houses, the inventory of the second-hand housing market is also decreasing. Especially in popular cities, homebuyers are facing a market environment with tight inventory and fierce competition. In order to cope with this challenge, homebuyers need to be well prepared, including timely understanding of market trends and speeding up decision-making.
In 2024, the US real estate market will remain an important investment area. Although high interest rates have brought certain pressure on the market, real estate is still a favorite choice for many investors due to the high risks of other investment channels. The following are some trends in real estate investment in 2024:
Although the short-term rental market (such as Airbnb) faces strict regulation in some cities, this market remains active, especially driven by the recovery of the tourism industry. In 2024, more and more investors will choose to buy vacation properties or invest in short-term rentals to obtain higher returns. Investors can realize asset appreciation by purchasing properties in popular tourist destinations and using them for short-term rental.
With the resumption of work and production after the epidemic, the US commercial real estate market will gradually pick up in 2024. In particular, market demand has rebounded in areas such as retail, office and warehousing. Although the trend of remote work still exists, the demand for office space has gradually recovered, especially driven by technology and financial industries. Investors can pay attention to opportunities in the commercial real estate sector in 2024, especially those commercial properties located in bustling areas with good rental returns.
With the improvement of environmental awareness and policy support, green buildings have become a hot area for investors. In 2024, more and more real estate projects began to adopt energy-saving and environmentally friendly designs and building materials. Investors can not only enjoy the benefits brought by environmental protection policies, but also increase the long-term value of properties through green buildings. For investors seeking stable investment returns, green building projects are undoubtedly an area worth paying attention to.
In 2024, homebuyers will face a more complex market environment and need to consider multiple factors when making homebuying decisions. The following are some of the factors that homebuyers need to focus on when making decisions:
In a high-interest environment, homebuyers need to pay special attention to their financing ability. Before buying a home, be sure to understand your loan conditions and calculate the monthly payment pressure and long-term burden in advance. Even first-time homebuyers should consider the impact of rising interest rates on home purchase costs and make financial preparations.
With rising construction costs, the supply of houses on the market in 2024 will be even tighter. Homebuyers need to pay more attention to the selection of houses, keep abreast of market trends, and make decisions. For homebuyers with special needs (such as families with elderly or children), they need to pay special attention to the adaptability of the house.
When buying a house, especially investors, it is necessary to evaluate the long-term value and future liquidity of the property. Especially in some emerging areas or developing cities, although the price may be low in the short term, in the long run, the appreciation potential of real estate is relatively large. Homebuyers need to combine their own needs and choose those properties with strong appreciation potential.
By understanding the current market trends, paying attention to emerging opportunities, and making rational decisions, you can find the most suitable home purchase and investment opportunities in the US real estate market in 2024. In such a market environment, being flexible in responding to changes and ensuring the accuracy and long-term nature of decision-making will be the key to your success in the US real estate market.
