2024 Real Estate Market Predictions

Experts share their thoughts and opinions about what’s in store for the real estate industry in 2024

By Jason Henninger

If predicting residential real estate trends were a simple matter, anyone would be able to succeed in the marketplace.

But it’s not that easy. Interest rates change, inventory fluctuates, agents come and go and new technology is always on the horizon.

To help forecast the direction of residential real estate in 2024, we spoke with Jared McFarland, CRS, sales agent for Century 21 Beutler and Associates in Coeur d’Alene, Idaho, (where he also serves as president of his local REALTOR^® association) and Mark Handlovitch, CRS, associate broker for RE/MAX Real Estate Solutions in Pittsburgh, Pennsylvania, who have been in real estate for 18 and 26 years, respectively.

The tone of their outlook is one of cautious and patient optimism, while looking frankly at the challenges the current market faces.

Identifying current trends

Handlovitch and McFarland agree that many of the current trends are likely to continue. They each voiced concern over the issue of low inventory, interest rates and the especially high number of REALTORS^® leaving the business.

“We’ve had more than 60,000 agents get out of the business, and our inventories are at an all-time low dating back to 1999,” Handlovitch shares. “You’re going to see even more people get out of this business, specifically those who got into it from 2020–2023 and thought this was easy. That’s when you really saw an uptick in the market, with increased prices, multiple offers and everybody was an Instagram rock star,” he continues. “All some agents had to do is put a sign in the yard, and they’d get multiple offers and make easy money.”

Obviously, that has changed. And many who got into the business, however talented or fortunate, didn’t necessarily have the experience to remain solvent during leaner times.

Inventory and interest rates have played a big part in making the market more challenging. “Demand dropped off dramatically last year, with the interest rates going up with the news of a potential recession and inflation,” McFarland says. “The inventory has stayed historically low. Many people are in a situation where they don’t have to sell. They have a great interest rate and don’t want to trade it.”

“Look at the situation with rental properties,” Handlovitch says. “Many owners aren’t willing to sell off the 3% mortgage rate they paid on that property. They would rather keep it. They’re sitting on that property and renting it out, maybe paying cash for another or a new home. I see these issues continuing into 2024, even 2025.” Handlovitch feels that without some intervention from the government, along the lines of the Obama administration’s program for first-time homebuyers, this will continue, but “even if they lower the interest rates, we still don’t have inventory. That’s our problem that we’re dealing with.”

Additional insights

Both experts see 2024 facing the same inventory challenges as this year but with small room for hope. “We’ve seen inventory come up just a tad, and demand still seems to stay pretty low. Right now, we’re starting to see prices creep down slightly. I think if demand picks up at all, we’re going to see prices go up. Interest rates are just below 7% [at the time of this interview], and I think if they bump up anymore, that will, unfortunately, lower the demand. In early 2024, I think prices will be about 3% to 5% less than today,” McFarland says.

On the tech front, the focus from McFarland and Handlovitch is all about the increasing usage of artificial intelligence (AI) and machine learning. AI has advanced rapidly in the last few years and shows no sign of slowing down, affecting every industry from publishing to healthcare—and real estate is no exception. Algorithms are becoming increasingly accurate in predicting purchasing behavior, and AI can potentially utilize this to create marketing material targeting a specific audience. At the very least, it can save time when creating ad copy. For agents who excel in selling face-to-face but struggle with marketing, this can be a boon. “I know a lot of people using it for marketing ad copy,” says McFarland. “It’ll be interesting to see how that affects the real estate business.”

“There are many ways a REALTOR^® can use AI,” Handlovitch says, but warns that you can’t let it do all the work. “You could be violating some laws. ChatGPT and other AI programs don’t know each state’s rules and regulations when it comes to real estate advertising. REALTORS^® know those rules, so you must be careful there.”

Back to basics

Looking ahead to a year that may show a little growth but will still face the difficulty of reduced inventory, Handlovitch and McFarland advise caution and taking a measured approach.

“Educate yourself,” Handlovitch says. “I’ve been in his business for 26 years and continually take courses and classes. Learn what’s going on out there. Understand what’s happening in the market. And look at it from different perspectives. Talk to mortgage brokers, not just your favorite mortgage broker. Talk to somebody on the other side of the country, and pay attention to what’s happening not just in your hyper-local city. And the big thing is to go back to your base.

If you work with your base—your previous clients, your current clients, your sphere—you’ll be successful. Understand there’s an ebb and flow to the real estate market. It happens all the time.”

McFarland agrees. “My advice would be just stick with the basics,” he says. “Get back to the fundamentals. Stay in touch with your sphere of influence, and work your past clients. They want to hear from you as an agent. Everyone’s wondering what’s going on in the market, and everyone wants an update. I think the agents who stick with fundamentals and keep working hard are going to do just fine.”

Stay educated on the latest real estate trends by enrolling in our newest certifications at CRS.com/learn/certificates.

Photo: iStock.com/ferrantraite