BAM Key Details:

  • Despite continued challenges with affordability, Zillow’s 2024 real estate predictions offer hope with anticipated increases in housing inventory and a stabilization of home buying costs.
  • The forecast highlights a strong rental market, particularly for single-family rentals and rentals in walkable downtowns.
  • Zillow envisions AI playing a pivotal role in enhancing the real estate experience in 2024, streamlining processes for buyers, sellers, and agents.

We can always count on a few things at the end of the year: business planning, giving back, Spotify Wrapped, and, of course, predictions for the coming year. 

Ryan Serhant shared his top predictions for 2024 earlier this week, and today, Zillow announced its own analysis of what the 2024 housing market will hold. 

With a focus on inventory and affordability, the forecast comes with a bit of relief for home buyers—something the entire industry has been waiting for. Of course, no one is expecting a crash, and buying a home in the new year will still be challenging. But Zillow’s projections offer a refreshing breeze of optimism after the past couple of years. 

As real estate professionals, you know that the end of the year isn’t just a time for reflection, but a moment to strategize for the challenges and opportunities that lie ahead. To help you prepare, here are Zillow’s six key predictions for 2024. 

#1—Increased Inventory

“More homes will hit the market as homeowners accept that mortgage rates aren’t falling any time soon”

Historically low housing inventory has been a major setback for buyers over the past couple of years. Low supply has been matched with high demand, driving up home prices nationwide. 

Many homeowners have been hesitant to sell, feeling the lock-in effect of low rates, despite wanting to move. But Zillow economists expect people to get used to the fact that 2-3% mortgage rates are not coming back anytime soon. As they do, more homeowners are likely to list their properties for sale and move on to something with an extra bedroom, bigger yard, or new location. 

That increased inventory leads us to Zillow’s second prediction. 

#2—Home Buying Costs will Level Off

“Home buying costs will level off, giving hopeful buyers a chance to catch up”

If the first insight doesn’t make buyers smile, this one will certainly make consumers take notice. If Zillow economists are right, the highest levels of unaffordability are behind us. 

This isn’t to say there will be massive drops in home prices. The most affordable homes will likely still have a great deal of competition, and real estate agents will need to continue to help buyers consider all their options. However, home price forecasts for 2024 are nearly flat—with some predicting single-digit increases and other single-digit decreases. 

#3—The New Starter Home

“The new starter home will be a single-family rental”

This prediction is where we face reality. Yes, economists expect a slight increase in inventory and some breathing room as far as affordability goes. Yet even with this, many buyers will continue to be priced out of the market. 

This means the new starter home isn’t one for the homeowner—it’s a single-family rental. The median age of renters is 47 years old, up from 37 in 2000, according to Zillow’s review of the U.S. Census Bureau’s Current Population Survey.

Zillow expects demand and prices for single-family rentals to continue to increase in the coming year. The good news here could be for investors or homeowners ready to rent out their properties. 

#4—Surging Rental Demand in Downtowns

“More markets will follow New York City’s lead with rental demand surging near downtowns”

Demand for rentals in walkable downtowns will likely increase in 2024. In New York City, StreetEasy data shows a surge in demand for rentals with an easy commute and access to Downtown and Manhattan. Zillow foresees this trend spreading to other downtowns. 

Suburban rents, which have consistently outpaced urban rents, are expected to continue their dominance in major markets. On a positive note, the multifamily construction boom has flooded the market with new rental options, giving renters more choices. 

#5—Competition for Homes in Need of TLC

“Traditional home buyers will compete with home flippers for homes that need a little TLC”

With inventory remaining lower than pre-pandemic norms, buyers will increasingly turn to homes in need of a little tender loving care. 

Zillow predicts traditional home buyers will continue to compete with flippers for these properties. However, as the higher cost of buying today makes flipping a more challenging endeavor, flippers may back off (just a bit) compared to previous years. Buyers willing to overlook minor flaws may find themselves in a less competitive market but should brace for some DIY home improvements.

#6—AI for Buyers, Sellers and Agents

“Artificial intelligence will enhance the home search experience”

AI has been all the rage in every industry in 2023, and it will continue in 2024. Zillow expects AI advancements to streamline the home-buying and selling process, benefiting buyers, sellers, and real estate agents alike. 

Many agents stepped into the world of AI for assistance with property descriptions and marketing material. Next year, tech experts expect advancements with visual and multimodal capabilities. Home shoppers, on the other hand, will likely benefit from AI providing guidance on home financing. 

Final Takeaways

Zillow’s predictions offer some hope for those navigating the 2024 market. With increased inventory, improved affordability, and the integration of cutting-edge AI, the coming year holds the promise of a more optimistic real estate landscape.