2024 Real estate market predictions

[Jack Seiden]

One thing I've been trying to do yearly is predict my local market (DC/Baltimore). Even when you are wrong, I always think it's a good exercise to figure out how to think about your local market (where your blind spots are). Last year, I was fairly right on price growth predictions, which were limited but showed positive growth. I was most yoy right on my home sales predictions; I thought we would see a 10-15% pullback in sales from 2022, but it's been closer to 15-20%. I was horribly wrong on rates; I thought they would be in the mid-5s by now.

So, for 2024 in my market, I think rates will decline to the mid-low 6s (I believe the 10-year declines to the low 4s, even high 3s with a recession; the spread declines to the low-mid 2s, and inflation gets below 2.5% by June, by way of lagged rent deflation finally showing up in CPI). I think in the DC suburbs, given our anemic inventory levels (I believe Montgomery County, MD, has had the single biggest drop in inventory since 2019 with a 70% decline in inventory; our other counties are not far behind), that will likely be enough to push prices up 5-7% yoy. I think in the city proper, where there is still a ton of inventory to be absorbed, we will see more like 3-5% growth (I still think the city represents a good long-term bet with how far prices have fallen, but it may take a few years for all this inventory to be absorbed).

I think our Baltimore suburbs will behave similarly to the DC region. I could even see places like Baltimore County having double-digit price growth since price points are so cheap. Baltimore City, I think Baltimore city could see similar numbers because of the price points, though I think the A/B class areas are probably more in that 5-7% range. Lastly, I think home sales are up 10-15% yoy, though I think the total lack of inventory makes it hard to imagine sales growing much more than that.

Anyway, comment with predictions for your local market. I'd suggest actually looking into things like DOM, active inventory, etc., as opposed to just being an agent/lender saying hoards of buyers are on the sidelines/it's always a good time to buy. Actually look into your local market's data and try to figure out if that's true for your market.

[V.G Jason]

I think we see low 6s for primaries by EOY 2024. If we face a more grave recession, I see a quick pivot(like 2basis turn over 1-2 meetings), getting us out of it. I do not believe we'll see a full scale recession but definitely a slow down between now & Feb24. That's going to keep minute rate drops in late q2, early q3. Going from 5.5 to 5 fed funds will not be a big boost as people think, especially not after another 5-7 months of 5.5%. It'll definitely cause some bleeding.

Think real recession price wise was Q4 22.

I think prices take time to climb back up, not an instant lift. If rates come down too quick, we'll see inventory come on too.  I think most of my markets go up 5-7% similarly, too. Q2 2025 I think is when we get real liquid.

Like to look back at these posts and see how (badly) wrong I am.