💼 Housing Optimism

briefcase | invest smarter

Whether or not Die Hard is a Christmas movie doesn’t really matter. The tradition of arguing over it is what counts.

Shine in 2024

Remember when 2023 treated us to inflation rates that were higher than our collective blood pressure? It's like every politician was vying for an Emmy in the ‘Best Performance in Creating Chaos’ category.

Yeah, that year was like a balloon inflated by a toddler – no idea when it would pop, but it would definitely end in tears. So here's to 2024, a year where hopefully, the only thing crashing will be me on my couch after a long day of not resetting my router for the 50th time.

So as we rev up for 2024, it's time to don those rose-tinted glasses and zoom in on why this year looks like a goldmine for entrepreneurs in the real estate realm. Let's break it down, Briefcase style – with a sprinkle of wit and a dash of data. 🕶️📊

The 'Just-Right' Rental Market 🏠💰

Let's talk rentals – they're like that Goldilocks porridge, finally getting it just right. The days of wild price swings making us all seasick? They're taking a backseat. We're already seeing a more balanced rental market. What does this mean? More predictability, less "yikes" moments for landlords, and a healthier market overall.

Just look at that sweet sweet moderation…

The Soft(ish) Economic Landing 🛬💼

Fear not, the economic bogeyman of a hard crash seems to be taking a nap. What's on the horizon? A soft landing. Think of it like landing on a fluffy cloud instead of a bed of nails.

With inflation cooling and hiring remaining strong, economists now believe a soft landing may be on the horizon instead of a recession. This is a significant change from earlier predictions in February when a recession seemed imminent due to the Federal Reserve's interest rate hikes and concerns about reduced spending. However, the economy has continued to thrive, and inflation is decreasing faster than expected.

Some products are even experiencing deflation. The Federal Reserve expressed cautious optimism, with Chair Jerome Powell pleased with the progress in combating inflation and maintaining full employment.

This means fewer economic shocks, more stable business environments, and a more predictable path for investment and growth. In other words, keep those business plans rolling!

Inflation Playing Nice 📉💲

Inflation, our not-so-favorite roller coaster, is easing up. We're flirting with that magical 2% Fed target, which is like music to the ears of consumers and renters. Why? Lower consumer prices = fewer missed rent payments and more disposable income floating around.

No Housing Market Armageddon 🏘️

Talk of a housing market crash? Not in 2024, baby! A crash is off the table, with supply still playing hard to get. This stability is a green light for strategic investments and developments. It’s why we are seeing smart money from private equity pile up to get ready to pounce on real estate assets in 2024.

Regulatory Tailwinds 🚀🏗️

Politicians, from your local council member to the big shots in D.C., are getting the memo: build, baby, build! Upzoning policies are popping up faster than popcorn, meaning more opportunities to develop and expand. Red or blue, everyone's saying "yes" to more construction.

So What? 2024 is shaping into a real estate entrepreneur's paradise. Stable rentals, a soft economic landing, cooperative inflation, a resilient housing market, and supportive policies? That's a recipe for opportunity, growth, and maybe some partying over New Year. 🎉🥳

So, dear real estate entrepreneurs, it's time to roll up those sleeves, polish those plans, and dive into 2024 with optimism and a solid strategy. The future's bright – and it's yours for the taking!

HEADLINES

Post Office: OK, maybe 2024 is all AI-generated sunshine and rainbows! A spanking new CBRE report examining over 3,400 lease comparables across 12 US office markets (from 2019 to Q3 2023) spills the beans: Effective rents for Class A+/A offices have taken a 1.2% nosedive since 2022. But wait, there's more drama for Class B/C spaces, which have plummeted by a steeper 3.9%. (CBRE)

Post Office: Since we are only in the early innings of the office downturn, Fitch Ratings is sounding the alarm on a looming downturn in commercial real estate (CRE) through 2025. Office properties lead the descent, with U.S. CMBS loan delinquencies predicted to double from 2.25% in 2023 to 4.5% in 2024. The national office vacancy rate is already soaring to 13.5% and might hit 15.7% by 2024. This signals a bumpy road ahead for CRE, especially in office sectors. (Fitch)

Pain in the Bank: Global banks cut over 60,000 jobs in 2023, one of the heaviest years for layoffs since the financial crisis. Investment banks saw declining fees due to a lack of deals and public listings, leading to job cuts. The merger of Credit Suisse and UBS resulted in 13,000 fewer roles, with more redundancies expected in the new year. (Financial Times)

BY THE NUMBERS

0%: Is what Zillow is predicting for home price growth in 2024. Existing home sales are forecasted to reach about 3.74 million, a slight increase yet an 8.5% drop from 2023's figures. The Zillow Home Value Index (ZHVI) keeps climbing year-over-year, but don't pop the champagne yet; November showed a bigger dip than usual, thanks to mortgage rates playing hardball above 7%. And the median US home value? Sitting pretty at $347,415. So, as 2024 approaches, it's less doom and gloom and more nuanced moves in the real estate market. (Zillow)

6.67%: Interest rates dropped for the 8th consecutive week to 6.67% last week. The interest rate for a 30-year mortgage from Freddie Mac dropped by 28 basis points this week to 6.67%. This is the biggest drop in a week since November 2022. Mortgage rates are now only 0.4 percentage points higher than they were a year ago, which is the smallest difference in two years. Mortgage rates have decreased weekly since the end of October, which is good news for people looking to buy a home. (Realtor.com)

$300 Billion: Is how much dry powder private equity is sitting on to invest in real estate. Armed with a whopping $300 billion war chest, private equity funds are revving up to dive into the property market as recession fears take a backseat. Blackstone's headline-worthy data center deal leads the charge, signaling what could be a full-blown buying frenzy in the real estate world as we enter 2024. (CoStar)

Reply

or to participate

Keep Reading

No posts found