Understanding the Real Estate Market in 2024: Trends, Impact of Elections, and Projections

As we navigate through 2024, the real estate market continues to be a topic of great interest and speculation. With the first half of the year behind us, it's essential to understand how the market has performed, what factors are influencing its trajectory, and what we can expect moving forward, especially in the context of an election year. Let's dive into the trends, impacts, and projections shaping the real estate landscape today.

Current Market Trends: Supply and Demand

The real estate market's health is often encapsulated in the balance between supply and demand. As of now, we are firmly in a seller's market on a national level, defined by less than six months of inventory. This means there are more prospective buyers than available properties, driving prices up. Specifically, in Long Beach, despite a slight increase in interest rates from 6.49% in Q2 of 2023 to 6.99% in Q2 of 2024, we saw an 11% appreciation in single-family homes and a 5.3% rise in condo values. Interestingly, duplexes enjoyed a 17% appreciation, whereas triplexes and fourplexes experienced a slight decline, stemming from financing challenges due to higher interest rates.

Election Year Impacts: Historical Trends and Expectations

Election years notoriously bring uncertainty to the market. Analyzing data from Freddie Mac highlights that in 8 out of the last 11 presidential elections, mortgage rates tended to decrease leading up to the election. Additionally, home sales generally saw an uptick post-election in 9 of the last 11 cycles. This trend can be attributed to consumers postponing major decisions until political uncertainties are resolved, impacting policy expectations and consumer confidence. Historically, while November sees a slowdown, this is typically offset by a rebound in December and the subsequent year.

Projections: Mortgage Rates and Market Health

Looking ahead, industry forecasts suggest that mortgage rates might dip slightly towards the end of 2024 and into 2025, enhancing affordability. Projections from Fannie Mae, the Mortgage Banking Association, and the National Association of Realtors anticipate average rates to hover around 6.67% for the rest of 2024, reducing to approximately 6.5% in 2025. Lower rates could potentially lead to higher property prices, with national and local (Long Beach) markets expected to experience continued appreciation, albeit at a slower pace.

Conclusion: A Cautious Yet Positive Outlook

Reflecting on these insights, it's clear that while the market may experience fluctuations, the overall outlook remains healthy. As Professor Dennis Shirshikov described, there's an expectation of "ebb and flow" over the next five years with gradual price increases and expanded inventory providing buyers with more options. However, real estate is inherently local, and national trends may not necessarily reflect your local market conditions.

Staying informed with timely, localized insights is crucial for navigating the real estate market successfully. Whether you're buying, selling, or simply monitoring trends, understanding these dynamics will help you make better-informed decisions in this ever-evolving landscape.