As an entrepreneur who advises small businesses, I closely follow real estate trends, which can greatly impact my clients. With the housing market remaining in flux, these key statistics for 2024 provide crucial insights.
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Home Sales Dropping But Prices Still High
- The median home sale price in the U.S. was $428,700 in January 2023, up 8.2% from January 2022 according to Redfin. But existing home sales dropped 34% over the same period according to the National Association of Realtors (NAR), reflecting low inventory, high prices, and rising mortgage rates.
- This diverging trend of falling sales but sustained high prices presents challenges. As an advisor to small business owners, I‘ve seen clients struggle to attract and retain talent when homeownership feels out of reach in their community. Businesses must get creative with salaries, remote work options, and other benefits to stay competitive in the labor market.
- There are also important regional differences. While prices keep rising nationwide, some markets are seeing sales plummet even further. For example, existing home sales fell 48.1% year-over-year in December 2022 in California according to the California Association of Realtors. The San Francisco metro area saw a stunning 60.5% decrease.
Tough Times Ahead for First-Time Homebuyers
- The average down payment for first-time homebuyers was just 7% in 2024, according to Realtor.com. Saving even this much can be very difficult, especially amid high inflation and rising rents.
- As an advisor, I‘ve worked with many first-time homebuyer clients as they navigate this frustrating market. I always recommend starting the planning process early, even before they are fully ready to purchase. This gives time to pay down debts, build credit, and grow savings.
- One option is turning to alternative loan programs like VA loans or USDA loans, which offer little or no down payment options for those who qualify. Habitat for Humanity also provides opportunities for some first-time buyers. But competition is fierce for these limited programs.
Commercial Real Estate Facing Headwinds
- The retail and office sectors are facing particularly strong headwinds. National retail vacancy rates rose to 5.5% in Q4 2022 according to CoStar data, the highest level since 2012, as more shopping moves online.
- Office vacancy rates in central business districts are also elevated, averaging 15.3% nationally per Savills Research, as remote work endures. Landlords are getting creative with amenity offerings to attract tenants.
- For small businesses I advise, flexible short-term leases can provide opportunities to secure space at more affordable rents. However, rising operating expenses due to inflation still present challenges. Careful planning and budgeting is essential.
The Path Ahead in 2024
Navigating real estate in 2024 will require flexibility and patience for buyers, sellers, investors, and industry professionals alike. My best advice is to make decisions based on your personal financial situation and tolerance for risk rather than trying to time the market. Maintaining perspective is also important – for most, owning a home remains an achievable long-term goal.
