“So, what’s going to happen with real estate next year?”

If you’re hearing this question from your clients, friends, family, and colleagues this time of year, you’re in good company. Ryan Serhant hears it every year around this time, so he posted a Twitter thread with his honest take on what we can expect in the coming year. 

And like every honest, knowledgeable real estate professional out there, he prefaces his forecast with a gentle disclaimer. There is no crystal ball, and he’s not pretending to be infallible. 

That said, he does have over 15 years of experience, with over $6B worth of luxury real estate transactions. So, while he openly admits his forecast is 100% educated guesses, his insights into the market are well worth taking into account. 

#1— “Even greater BIFURCATED MARKETS” 

Just to clarify, something that is “bifurcated” is split into two parts or branches. 

Serhant explains market bifurcation in the YouTube video he references in his Tweet: 

“Market bifurcation happens when disjointed market movements, such as growth and value investments, move in different directions—or when high-quality and low-quality securities move out of sync, causing one to perform much better than another.”

As Serhant points out, some industries are “returning to pre-COVID patterns,” while others have permanently changed and are moving toward a new post-COVID normal. 

Think about how remote work has changed the need for office space—and how, especially during COVID, online marketplaces replaced brick-and-mortar retail. After lockdowns, there was a return to brick-and-mortar shopping and in-person office use—but not to the same extent. 

And now, we have a push for converting unused office/commercial space into residential units to increase housing supply. But, as Serhant points out, not all companies are letting go of their office space; some are even asking for more. 

We are right now in an office space that we probably should not be in. But we’re in it because of the repurposing of commercial space.

Ryan Serhant

#2— “There will be more NATIONAL SEARCHES”

Thanks to the increase in remote work, buyers are looking well beyond their current market when shopping for homes. And Serhant expects an increase in those nationwide home searches. 

As fewer and fewer are held to a specific location by the requirement to commute (every day or at least every week) within an hour of their workplace, more people are expanding their home search well beyond the radius they would have considered before COVID.

Some are moving to more affordable markets to see how much home they can get with the housing budget they have. Some are moving to live closer to family or friends. Some are moving to areas they’ve dreamt of moving to for years. 

And these buyers are using digital tools and platforms in their home searches more than ever. 

So, as we think about pricing, how to value property in 2024, we now have to look at comps on a national level… it’s no longer ‘What is this home worth in this building or in this block?’ It’s now ‘What do these dollars get us in this building or on this block—in this town, in this community, in this state—compared to where most people have now moved to?’ So, what does $1M get you here in New York City? But now I also have to look at it compared to what you can get in Long Island, Connecticut, New Jersey, Pennsylvania, and South Florida—as a comp. 

So, the national search is going to put pressure on pricing as interest rates slowly start to stabilize or come down. Because everything is on a much bigger landscape now than it’s ever been before.

Ryan Serhant

#3— “SUBURBS are on the rise”

Generally speaking, homes in suburban communities offer more privacy and more local amenities. And while those amenities can drive up the cost of living, it also makes these areas more attractive to investors. 

It’s no secret that, in a lot of markets, sales volume is down by more than 50%. In most markets, listing volume is down by over 20%. Yet median pricing is up by almost 5%, mainly because inventory is at such a low level, it can’t keep up with demand. 

This we know. But Serhant’s point is that, while property values have continued to climb, so have tax dollars kept flowing into suburban communities. 

And this is going to give them the funds to reinvest and attract more people. So, something to pay attention to a lot in 2024, if you’re looking to invest, always look to what the municipalities are doing in that marketplace. And all these new tax dollars coming into the south Floridas, in the Texases, and all the suburbs of the world. What are they using that money towards now—new schools, new restaurants, new parks, new beaches, everything. So, pay attention to where local tax dollars are being spent as a way for you to gauge a great place to invest.

Ryan Serhant

#4— “BRANDED RESIDENCES will be in strong demand”

If, like me, you read that and thought, “What on earth is a branded residence?” keep reading. It took me a couple of re-reads before I could make sense of it. 

Since 2010, Serhant has seen a 40% growth in branded residences. And buyers have proven willing to pay a premium for “hotel-branded residences,” which offer services such as In-room dining, housekeeping, and other services you might expect from a luxury hotel. 

So, something we’re going to see a lot of, as more and more people enjoy services, you’re going to see services come into more and more neighborhoods.

Ryan Serhant

#5— “DOWNTOWNS built around professional workers will feel immense pressure”

By that, he means downtown areas will feel growing pressure to step up their incentives for developers and homeowners to either create new attractions or occupy empty spaces. 

Cities are going to need to create programs and incentives in 2024 to encourage businesses and workers back into the cities. This isn’t a whole lot unlike what happened in Manhattan after 2001 and in 2008, with the extension of different types of tax abatements. We had 421A and 421G tax abatements that incentivized developers to build in areas that had far less demand than others…. Today, it’s due to COVID. And it’s real. We do not want to have ghost cities. So, how do we incentivize developers to and potential homeowners to bring life back into these dense urban landscapes? We’re going to see more and more of that in 2024 as our local politicians are going to have to get smart. You know why? Because they’re going to want those tax dollars.

Ryan Serhant

#6— “Investors are going to be BEARISH on real estate”

When we look at today’s mortgage rates and low transaction volume (both of which could change in 2024), it just spells risk for investors. And that increased risk has forced a lot of investment dollars out of the real estate market in the near term. 

But, as Serhant explains, that’s not necessarily a bad thing. 

Billions of dollars have been spent over the past couple years on available new construction homes in greater America, which has taken great inventory off the table for John and Sally Buyer, which has just raised the prices of all available resale inventory and raised the prices of all rents. Because new construction homes rent for more money, which raises the median rent, which makes homeownership and rental affordability that much tougher on your average homeowner and renter.

Ryan Serhant

#7— “Prices are going to continue to…INCREASE!”

The inventory shortage is going to continue, and it will keep pushing prices up, even though current mortgage rates and housing affordability are not in a good place for long-term growth. 

As the economy remains strong and inventory remains low, demand will continue to outpace supply growth, driving up housing costs. 

But if interest rates do come down, you think prices are high now? You think inventory is tight now? Wait til you see what happens when sellers feel like they have power even more in their hands. Because now, all of a sudden, their home is going to be more affordable to a greater section of people. It’s going to raise prices even further. 

Hopefully, there’s no legislation that comes out in 2024 that makes the real estate business even harder than it already is for most people. You think rates are high? Remember you can always refinance your rates, but you can never renegotiate the price you pay for the property.

Ryan Serhant

#8— “Interest rates will actually STABILIZE”

Serhant’s final prediction is that interest rates will stabilize in 2024. He doesn’t see them plummeting, because that would signify that the Fed believes the economy is in a weak position. 

As of Serhant’s recording, unemployment sits at 3.9%. And while that is still historically low, it’s 15% higher than it was. But as long as unemployment remains low, the Fed will keep the rates fairly stable. They might bring them down a bit. But it won’t be a steep decline since that would mean the Fed sees a need to incentivize the economy with lower rates. 

Inflation, I believe, will finally be under control by Q2 of 2024, which is going to allow the Fed to stabilize interest rates into our ‘new normal,’ which will set the path forward for a year that I’m very, very much looking forward to: 2025!

Ryan Serhant

Every year really can be the GREATEST year of your life!

Whatever the market is doing this year and into the next, Serhant says more than once— 

Remember, markets shouldn’t dictate your outcomes. They should only dictate your strategy.

Ryan Serhant

The better you understand what’s going on in the housing market, at both the local and macro levels, the better you can adapt and strategize. 

So, it’s completely within the realm of possibility—and within your power—to make this year and then the next the “greatest year of your life” as a real estate agent. 

This is not a “rose-colored glasses” situation. But constantly leveling up is a whole lot easier when you have accountability built into your business plan. 

If you’re a BAMx member, you have a whole community of motivated and supportive real estate professionals to connect with on a daily basis—along with a growing library of value-packed online courses and livestreams. 

If you’re not part of our community yet, take advantage of the extended Black Friday sale for Cyber Week and save 20% on your membership by using the discount code: BLACKFRIDAY. 

The sale ends Thursday, November 30th. On Friday, the cost of membership will double. Sign up before then to be grandfathered in at the current price for as long as you keep renewing your membership. 

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