This is Corey Cohen, founder of The Roebling Group, and here's a glimpse into market sentiment for 2024. If you're on the move this year I'd be happy to assist.
2024 Housing Outlook: What’s in Store for Mortgage Rates and the Housing Market at Large?
As we step into the new year, all eyes are on the housing market and the potential impact of mortgage rates on real estate dynamics. Here's a quick summary of what you need to know.
Mortgage rates are set to influence market activity. Anticipation is building for a more active housing market in 2024, fueled by potentially lower mortgage rates. However, don't expect a seismic shift, as caution persists among homeowners and prospective buyers.
There are several economic factors to consider. The trajectory of mortgage rates hinges on the economy's stability, with predictions ranging around 6% if things remain steady. Should the economy face challenges, mortgage rates could see a more significant decline, according to Greg McBride, Bankrate's chief financial analyst.
The American real estate landscape will continue to get more buyer-friendly. But, sellers will remain in control. Lower mortgage rates are good for buyers, but intense competition and low inventory mean sellers still hold the upper hand. Tampa Bay agent Adam Grenville notes that sellers will stay "in the driver's seat" despite favorable rates.
Challenges will persist for first-time buyers. While lower rates benefit buyers, hurdles persist, and increased demand with limited inventory may drive home prices higher. First-time buyers in the starter home price range may face added challenges, given the impact of high interest rates and prices.
Single-Family Homebuilding Hits 1.5-Year High
The latest report from the Commerce Department reveals a significant surge in U.S. single-family homebuilding, reaching a 1.5-year high in November. Here's a quick breakdown of the key highlights:
1. Momentum Building: Single-family housing starts soared by an impressive 18.0% to a seasonally adjusted annual rate of 1.143 million units, the highest level since April 2022.
2. Driving Forces: Declining mortgage rates and incentives from builders are expected to draw potential buyers back into the market.
3. Economic Impact: Economists anticipate a positive impact on fourth-quarter GDP growth, with the housing market playing a crucial role in avoiding a recession next year.
4. Market Dynamics: The 30-year fixed mortgage rate averaged the lowest since August, contributing to the rebound in confidence among single-family builders.
5. Multi-Faceted Growth: While single-family housing projects saw a substantial boost, overall housing starts jumped in November.
6. Inventory and Affordability: The housing completion rate rose, but inventory remains below pre-pandemic levels.
NYC's Office Space Makeover
Exciting developments are reshaping New York City's skyline. Particularly, commercial-to-residential conversions.
There is a large focus on turning vacant office space into homes. NYC, in need of housing, is repurposing excess office space, with 5,812 units in the pipeline for commercial-to-residential conversions. Manhattan is leading the charge, contributing 69% of the total units, but the trend is spreading across Brooklyn, Queens, and even the Bronx.
Major conversion projects are taking place in the Financial District, Astoria, and Penn Station. FiDi hosts three massive office conversions, including the 25 Water Street project with 1,263 residential units. The historic property, once home to the New York Daily News and J.P. Morgan Chase, is undergoing significant renovations. Astoria in Queens secures the second spot in conversion units, with 631 homes across three office/commercial projects. Manhattan's Penn Station area rounds out the top three with a single project set to deliver 615 residential units.
Prada has elevated its presence on Fifth Avenue by purchasing its flagship store at 724 Fifth Avenue for a staggering $425 million. The move signifies Prada's commitment to the high-profile location, which it plans to utilize for offices and storage as well.
The Willets Point neighborhood near Citi Field is set for a major transformation. The project covers 62 acres and includes a mix of developments, such as 2,500 units of affordable housing and a 25,000-seat soccer stadium for the NYC Football Club.
Rents in Manhattan are experiencing a decline, with the median rent in November dropping. The trend is expected to continue into 2024, barring any major adverse economic events.
According to the Mortgage Bankers Association's (MBA) seasonally adjusted index, mortgage demand decreased despite falling rates. Despite the current dip in demand, the MBA anticipates positive developments in the market, expecting a decline in mortgage rates with the Fed signaling rate cuts.
Have a question about buying or selling real estate in NYC? Please feel free to book an appointment with me here for a consultation.
The Roebling Group