2024 Real Estate Market Steering Factors
by Chip Collins
In 2023, the market year was highlighted by three I’s: Inventory, Interest Rates, and Insurance, all of which shaped client discussions, decisions, and directives. We took a deeper dive into these topics to see how they will shape and steer real estate in the Lowcountry this coming year.
Interest rates climbed throughout most of 2023, peaking in October at over 8%, and then began to settle closer to 7% in January 2024. While 7-8% is pretty compelling historically speaking, it doesn’t hold a candle to the 3-4% rates that so many people purchased or refinanced to a couple of years ago. This gap presents two distinct challenges in the market, including affordability for Buyers, and an anchoring effect for Sellers. We’re watching key metrics in the economy with great interest as they show promise about what lies ahead for interest rates in 2024. To learn more about this important steering factor, watch our interview with local lending expert Matt Webster of TD Bank below.
Back in November, we talked in a video about how the holiday season (November and December) could be surprisingly busy, and that pretty much proved out, demonstrating that our local market is more “year-round” than ever before. As such, we don’t expect Sellers to “wait for Spring” as much as they typically have in prior years, and we are already seeing New Listings pick up in January, which has led to a flurry of sales activity. Buyers are poised to jump on the right opportunity when they see it, and Sellers who are getting ahead of that curve are seeing the benefits. We expect that more Sellers will enter the market in 2024 than they did in 2023, especially if interest rates cycle down closer to 5.5-6%, which should probably be attractive enough for some Sellers to give up their current 3-4% rate in exchange for getting into the next property they want or need.
There’s truly nothing gentle or soft about a “hard insurance market,” and anyone who experienced a premium renewal in 2023 can attest to that! The cost of insurance is at a record high, and this heightened expense of ownership is on everyone’s mind. That’s why we sat down with local expert Meg Herman of Goosehead Insurance to explain what happened in 2023, what the forecast is for 2024, and what homeowners can do to help control their overall insurance costs. Check out this incredibly insightful conversation about all the current insurance market at the end of this blog.
Rentals and Cash Flow
The rental market goes hand-in-hand with the local real estate market, whether an owner is seeking a long-term rental or seasonal vacation rentals. Both rental arenas spiked sharply during the pandemic market, yet 2023 showed some signs of shifting, making it a little challenging to fully pin down what to expect in 2024. Amid rising insurance expenses (and property taxes due to the reassessment in 2023), more and more owners (and Buyers) are paying closer attention to cash-flow scenarios as they look into the new year. National and international travel trends are as much at play for short-term rentals as interest rates are for long-term rentals, so we’ve gone right to the source in both arenas to get perspective and insights from local experts Dru Brown of Island Time Vacation Rentals and Henri Kirsten of Miller Long Term Rentals. Watch our sit-down conversations with these local experts to see what they expect in 2024 at the end of this blog.
Always a critical steering factor to any market, we can confidently say that this one is “in the bag.” The reality is that the Lowcountry of South Carolina is wildly popular and highly desired. The pandemic opened people’s eyes as to what’s important in life, and it turns out that location and lifestyle sit right up toward the top of that list, lending the beauty, climate and culture of our area to appeal to a whole new audience of Buyers. The key now is to keep up with that demand, which has developers and planners laying out an impressive array of future developments, resources, and attractions (especially on the mainland) amid a promising future for this bustling corner of the country.
While the term “traffic” may be subjective, it’s nonetheless an issue wherever a population is growing, and Hilton Head/Bluffton is no exception. Our expanding market area is putting strains on our existing resources, roadways, bridges, and infrastructure, requiring the Towns of Bluffton and Hilton Head Island to pay sharp attention to how things play out in the coming years.
Both Towns are under new leadership, and we had the opportunity to sit down with Hilton Head Mayor Alan Perry to learn more about his take and vision on a few of the most pressing issues in his arena, including traffic, workforce housing, the Town’s short-term rental policy, and more. Watch our interview with the Mayor to hear what we learned below.
The Kitchen Sink
The reality is that we live, work, and play in a very dynamic and sophisticated marketplace that is subject to a myriad of Steering Factors in addition to those highlighted above. As we work our way into 2024, here are a few additional topics that we are expecting to shape how the market year progresses.
- Presidential election years usually introduce a factor of uncertainty and anxiety into the market, though the last election year demonstrated that business as usual was still possible amid the hype of the elections
- Global events capture our collective attention and concern, and yet it’s anyone’s guess at this time just how far those will impact Buyer and Seller behavior
- Generation shifts are afoot as we watch the “Silver Tsunami” of baby boomers prepare to downsize while Millennials make decisions on where to live, where to work, rightsizing their homes, etc.
- The stock market performance in 2023 bolstered an overall sense of wealth, begging the question of just how much of that equity and wealth will be shifted into real estate investments in 2024
- The real estate industry is grappling with some foundational topics that may ultimately adjust how Agents, Sellers, Buyers, and even lenders make their way to the closing table
As always, we’re doing our best to stay at the forefront of these Steering Factors daily, and we welcome your comments, questions, and concerns to be shared at any time.
Thanks for your time and interest. Feel free to take a look at the 2024 Market Analysis in its entirety linked below… Have a fantastic year ahead!