The 2024 Outlook For Real Estate Investors

Dec 21, 2023

What’s in store for 2024? 

What do current trends and patterns mean for real estate investors over the next year?

The past few years should have certainly taught investors to become comfortable with uncertainty. There are many factors at play which could influence prices and transactions over the next year. Here are some of them.

High Consumer Prices

Hedge fund manager Ken Griffin has not only predicted that NY is on its way to losing its position as the financial capital of the country, but that we are facing a period of many years of high inflation. 

Even if officially published data proclaims low inflation rates, prices are already greatly inflated. Between inflation, shrinkflation, and tipflation, food insecurity is growing as a result. 

According to the Long Island Business Network, the number of people requiring food assistance has grown by almost 350% in the past few years. This year, the number of people requesting help with meals from the IFNN is up 70%. Donations to help them meet that need are only up 28%. 

Interest Rates

Higher interest rates are not only making everything even more expensive in real terms, but are becoming a barrier to some expenditures. Like new cars. 

Of course, looking at the big picture, even though rates have risen, they are still 50% or less of highs we’ve seen in the past.

AI & Unemployment

Although it’s not showing up in official data yet, AI is having a substantial impact on employment. Some large firms are touting the fact that AI means they no longer need 40% of their staff. 

It’s quite likely that this will translate to many households at least experiencing some gaps in income, or lower incomes. 

Business & Consumer Financial Distress

While the residential market appears to remain very strong, the latest bank data shows ongoing deterioration among commercial real estate, auto, and credit card debt performance. This trend is unlikely to improve over the end of year holiday season. 

Much of this debt appears to be in the later stages of default. This signals that lenders and servicers have either been unwilling, or unable to conduct workouts to get borrowers back on track. 

Policy & The Election

Current policy is clearly pushing the economy in a certain direction. Whether that trajectory changes or not will depend mostly on the outcome of the 2024 presidential election. 

The Growing Need For Housing

The need for housing, and especially rentals only appears to be growing. The publicly advertised shortage of homes for sale is pointed to as one of the main reasons that home prices continue to go up. 

Some estimates put the current shortage of housing units at around 3.8M. In addition to immigration, and a new generation coming of age, financial distress is likely to cause more households to split, relocation for work. Affordability is also changing where the most demand is. 

This currently appears to favor the East Coast and South versus the West.

Summary

The next year could see an apex in the convergence of some of the recent policies and economic trends we’ve been experiencing. 

Retail prices are expected to remain high. Distress going on behind the scenes is creating more opportunities for investors though. 

As an investor, this year is about aligning with those that can access the inventory at discounts, securing new streams of income, and engaging in well managed opportunities that keep you financially strong. 


Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund.


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Photo by Galina Nelyubova on Unsplash