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Zillow top 10 hottest housing markets 2024

Plus, New Apartment Deliveries Expected to Peak in 2024 and 6 more Real Estate Insights

Macro Trends

Latest Jobs Data Makes March Rate Cut Slightly Less Likely link

  • The U.S. economy added 216,000 jobs in December, surpassing the expected 170,000. This robust job growth, despite downward revisions for October and November, suggests a resilient labor market.

  • Unemployment remained stable at 3.7%, but the labor force participation rate dipped slightly. Average hourly earnings continued to grow at a strong pace of 4.1% year-over-year, reflecting ongoing wage pressures.

  • December's job market performance, particularly stronger than anticipated, will likely influence the Federal Reserve's approach to interest rate adjustments. This cautious stance is expected amidst economic uncertainties and impacts on commercial real estate.

Real Estate Trends

Buffalo, New York Projected as 2024's Hottest Housing Market link

  • Buffalo, New York, is anticipated to be the leading housing market in 2024. This prediction is based on Zillow's comprehensive analysis of real estate trends.

  • The forecast suggests a shift in housing market dynamics. Factors like affordability, job market conditions, and demographic trends are influencing this change.

  • The broader housing market is expected to see more homes for sale and improved affordability. This trend indicates a potential easing of the tight market conditions experienced in previous years.

A Look Back at 2023 US New Home Sales Activity link

  • In 2023, new home sales in major metro areas declined, with New York experiencing the largest drop. New home prices increased by only 2% through November 2023, a significant slowdown compared to the 10% growth in 2022.

  • The South, particularly Dallas and Houston, led the U.S. in new home sales. In contrast, New York's new home sales were predominantly condos, making it an outlier in the top 10 Metropolitan Statistical Areas for new home sales.

  • Overall, the U.S. housing market saw a sharp decline in home sales since 2021. High interest rates in 2023 dampened demand, and builders lacked incentives to return to pre-2021 construction levels. However, active investors in the market may provide some demand for new home sales.

Key Forecast Themes for 2024 link

  • The 2024 forecast anticipates continued economic growth, albeit at a slower pace, with strong wage growth and extended renter lifecycles driving demand. Supply is set to be the main factor influencing market-level rent growth, with a direct correlation between supply levels and rent growth rates.

  • Absorption rates have stabilized in 2023, with about 250,000 units absorbed, aligning with the U.S. average since the 2010s. The fourth quarter of 2023 saw particularly strong demand, indicating a robust capacity to absorb the significant supply expected in 2024.

  • Rent growth slowed considerably in 2023, with a year-ending growth of only 0.2%, but there's a slight upward trend in rent growth momentum. The focus in 2024 is expected to shift towards occupancy preservation, with modest rent growth and significant market-level variations, especially in regions like the Midwest and Northeast.

New Apartment Deliveries Expected to Peak in 2024 link

  • Apartment supply in 2023 reached a 36-year high, with nearly 440,000 units completed. This surge is the result of construction projects initiated when occupancy rates and rent growth were near record highs.

  • In 2024, an even higher number of units, approximately 671,000, are scheduled for delivery. However, this peak is expected to be followed by a dramatic plunge in completions due to recent slowdowns in starts, linked to higher financing costs and softer market fundamentals.

  • The high supply of apartments is beneficial for renters but poses challenges for investors. In 2023, rent growth fell across 40% of U.S. metro areas, particularly in regions with significant new supply, while areas with limited new apartments saw rent growth of 3% or more.

Industrial’s Vacancy Rate Tops 5% for First Time in Three Years link

  • The industrial vacancy rate has risen to 5.2%, a significant increase since Q3 2020. This change is attributed to continued speculative construction and muted demand in the market.

  • Despite this increase, the current rate is still below the 15-year long-term average of 6.4%. This suggests a relative stability in the industrial real estate sector compared to historical trends.

Location Specific

Atlanta Multifamily Vacancy Rate Doubles in Two Years, Now Highest Among Large US Markets link

  • Atlanta's multifamily vacancy rate has seen a significant increase, doubling over the past two years. This surge is attributed to record new supply outpacing demand in the region.

  • The city now holds the highest vacancy rate among major U.S. markets. This shift reflects a notable change in the housing landscape, challenging previous market dynamics.

One Chart

Americans Are Getting Married Older Than Ever link

  • Census data analyzed by Statista reveals a significant shift in American marriage trends. In 2023, the median age for first marriages has risen to 30.2 years for men.

  • This trend reflects broader societal changes, including evolving career priorities and lifestyle choices. It indicates a departure from traditional timelines for major life events.

Pro Member Only Content

Top 10 U.S. Counties with Highest Annual Increases in Home Flipping Returns in Q3 2023 

(This content is restricted to Pro Members only. Upgrade)

  • Home flipping in the U.S. saw a decline in Q3 2023, with 72,543 homes flipped, representing 7.2% of sales. This marks a decrease from 7.9% in Q2 2023 and 7.7% in Q3 2022. Despite the decline in flipping rates, profits for home flippers have been on the rise.

  • Profit margins for home flipping increased for the third consecutive quarter, recovering from a significant slump. The typical profit margin reached 29.8% in Q3 2023, up from 29% in Q2 2023 and a low of 22.4% in Q4 2022.

  • The top U.S. counties for annual increases in home flipping returns include Lorain County, OH (195.3% ROI), and Niagara County, NY (213.5% ROI). These remarkable gains highlight significant regional variations in the home flipping market.

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