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Residential Housing Trends for 2024 Predicted to Closely Resemble 2023 Trends

As 2024 begins, American home buyers continue to grapple with the same housing market challenges they faced in 2023. High prices, soaring mortgage rates, and a scarcity of available homes are the primary concerns.

Home Prices Expected to Rise

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According to Selma Hepp, chief economist for CoreLogic, there’s little relief in sight for home buyers. With low supply and increasing demand due to lower mortgage rates, home prices are expected to continue rising.

CoreLogic’s Home Price Index Report

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CoreLogic, a leading property information and analytics provider, released its Home Price Index showing a 5.2 percent year-over-year increase in U.S. home prices in November. This is the largest annual growth rate since January 2023.

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Forecast of Housing Cost Hikes

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CoreLogic predicts that the rise in housing costs will slow down to 2.3 percent by this spring. However, a complete stabilization of prices is not expected immediately.

The Issue of Low Home Inventory

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The lack of home inventory has been a significant problem for buyers over the past two years. Ms. Hepp is not optimistic about a substantial improvement in home inventory in 2024.

Slight Improvement in Housing Inventory

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There has been a minor increase in housing inventory, as indicated by Altos Research. From Jan. 5–12, 2024, inventory rose slightly but was still nearly 64,000 listings short of 2023’s high.

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Homeowners’ Reluctance to Sell

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A major issue with inventory is homeowners’ reluctance to sell due to higher interest rates. Ms. Hepp notes that with home prices up 20 to 40 percent since 2020 or 2021, selling becomes less attractive.

Morgan Stanley’s Housing Market Prediction

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Ellen Zentner, Morgan Stanley’s chief U.S. economist, expects weak home sales in the first half of the year. However, she predicts an uptick in activity in the latter half of 2024 and into 2025, as affordability improves.

Increase in Homebuilding Activity

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Ms. Zentner also forecasts an increase in homebuilding activity by the second half of the year. This is expected to contribute to a gradual improvement in the housing market.

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Shift to Build to Rent (BTR) Communities

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In the Sunbelt area, there’s a strategic shift towards Build to Rent (BTR) housing communities. These communities cater to Americans who prefer the flexibility of renting over home ownership.

RREAF Holdings’ Investment in BTR Homes

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Doug McKnight, president of RREAF Holdings, discusses his company’s investment in 16,000 BTR multi-family homes. These homes are primarily located in Texas and cater to the growing demand for rental homes that offer more flexibility.

The Appeal of BTR Communities

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BTR communities offer a unique living experience, combining the benefits of single-family homes with the flexibility of renting. These communities are emerging in cities like Myrtle Beach, Phoenix, San Antonio, and southern Nevada.

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