Well, guys and gals…It’s 2024!
This means we need to get ready for some of the most unwatchable or must-see TV if you have a sick mind…
Yes, I am referring to the 2024 Presidential Debate rerun with two 80-year-old guys yelling incoherent statements at each other.
Speaking of the Donald… Did you know there is a Trump translator? I typed in the words 2024 is going to be a big year for real estate into the translator and this is how Donald Trump would put it:
“What I’m saying is, I’ll tell you at the time, I’ll keep you in suspense, OK? Because 2024 is going to be the biglygest best year ever in real estate. Did you know, Hillary Clinton created ISIS.”
One more…
“And honestly, it was both very beautiful and very sad – 2024 is going to be the best of the best year ever in real estate. I’m proud of my net worth. I’m not doing that to brag, because, you know what, I don’t have to brag.”
Here is the link if you want to play around with it…Enjoy
http://www.donaldtrumptranslator.com/
Let’s talk real estate (because nobody wants to talk about our Presidential prospects)
2022 & 2023 were TOUGH.
When you see interest rates bounce around each year by 100-300 basis points in a year, you understand why both sellers and buyers just packed their bags and went home. Just about everyone sat those years out whether they liked it or not.
Just too much volatility.
The only people keeping the real estate market afloat the past two years were:
- Contractors: New Construction never took a step back really. Mainly due to their ability to buy down rates and keep them in the high 5’s so people could afford them still.
- Baby Boomers: 45% of baby boomers purchased their homes with cash. So interest rates did not impact them nearly as much as millennials.
- Investors: I feel like I quoted Warren Buffett way too much in 2023 but it comes to mind every time I bring up this topic: Be GREEDY when others are FEARFUL (and vice versa).
If you are a loan originator, appraiser, inspector, Realtor and you are still standing after 2 years of body blows from the FED…You are in the minority. AND chances are very high that you are going to have your best year ever in 2024.
Let’s dive into my predictions for 2024 (summarize from my prior podcast and email from December)
And then let’s talk strategy, shall we?
Predictions for 2024 in a nutshell:
- Appreciation will continue at 3-5% Nationally. (So that home crash everyone asked about for the past 3 years…It ain’t happening).
- Mortgage Rates will range between 5.5% – 7.25%. They should hover in the mid 6’s for the first half of the year and if the Fed pivots OR if the economy worsens and job losses increase, you WILL see the 5’s again.
- REFI’s will triple (which is not saying much since the bar was set so low in 2023). People with equity will have to pull out cash to pay down consumer debt from overspending the last 3 years.
- Demand will far outpace Supply once again.
- Demographics are Destiny: Pay attention to demographics.
SUPPLY & DEMAND:
Population in 2007 was 301m in the US. Active Inventory was 4m.
Population in 2023 is 335m with 1.15m Active Inventory.
Strategy going into 2024:
Look, I get it…Nobody will be able to say definitively what will or will not happen in 2024. But history sure does leave us a LOT of clues and indicators that we can utilize to base our investment decisions on.
What should you be thinking about in 2024?
- Mortgage applications: When you see 2-3+ months of increased applications coming in (we track and follow this data by the way) the tsunami in demand ARE coming…Assuming mortgage rates do not go crazy in the wrong direction which nobody is predicting given that we have most likely hit our peak in October of 2023.
- Marry the house & date the rate: Interest rates matter: If we learned anything from 2022-2023 it was this. So the 6.5 – 7% interest rate is your greatest ally.
- Cash flow should NOT be the only metric you go off of when determining if you should buy a property…Cash flow is a DEFENSIVE metric. In other words, you have a buffer between your payment and the rent you receive each month. So if year one, you are cash flow positive, you have set yourself up for long-term success given the fact that interest rates will fluctuate and eventually come down low enough for you to refinance at which point your cash flow will increase dramatically.
- You may not know this but FHA & VA just changed their down payment requirements for buyers looking to purchase 2-4 unit multi-family homes. It has gone from 20-25% down to 5%! So the buying pool for these types of properties is going to explode (along with prices). BUY duplexes, triplexes, and fourplexes if you can for this reason!
- “One Rental at a Time” is a podcast & book that I recommend to others looking to get into real estate investing. The concept of buying one rental per year resonates with me because it gets to the principle of dollar cost averaging and the slow & steady focus on financial freedom.
Did you know that the real estate market Nationally is
75-6 since 1941?
Meaning…Residential real estate APPRECIATED 75 years out of 81…AND 5 of those down years were between 2007-2011. Outside of that once-in-a-lifetime period, values have gone up.
If we can help you on your journey to acquire investment properties in the Southeast Valley, let’s connect.
I hope everyone has an amazing year and let’s all pray the elections do not divide this Country any further than it already is.
Let us all not forget how blessed we truly are to live and work in this Country even with all of it’s flaws and problems.
BJ
