How to Capitalize on Real Estate Investing Trends in 2024

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The real estate market has been on a rollercoaster ride since 2020, experiencing three major shifts:

• - The COVID-19 pandemic in 2020
• - Rising mortgage rates in mid-2022
• - The declining inventory of properties due to high mortgage rates in early 2023

The declining inventory of properties has heavily influenced the housing market predictions for 2024 because it increases the competition among buyers. The low supply of properties and high demand have led to faster home sales while putting upward pressure on home prices.

In this article, we’ll discuss the trends and juiciest opportunities to grow your portfolio and make some serious dough in 2024. With a continuously evolving real estate landscape, staying ahead of the game is crucial to seizing lucrative investment opportunities.

1. Home Prices Will Continue to Increase in 2024

This chart shows the median home value in the United States, according to Zillow. As we can see, the home appreciation line grew consistently from 2020 to 2022. The growing appreciation rate was called the “COVID effect,” when people rushed to buy houses like there was no tomorrow.

As a result of the COVID effect and a rise in mortgage rates, housing inventory levels plummeted nationwide, while the median home prices increased (as much as over 20% growth in some cities). However, the tide has turned since then.

By mid-2022, the chart shows a declining trend, which means house prices were either leveling or dropping. But that drop was to be expected because the rapid price growth over the past few years was unsustainable—it was like a sugar rush: Exciting while it lasted, but eventually, reality came crashing in.

Nonetheless, the United States home median price was up by 1.2% over the past year, from $344,887 in June 2022 to $348,853 in June 2023. And over the next 12 months, the prediction is that home median prices will continue to rise by 6.3%.

What You Can Do

While surging home prices might seem like a roadblock, you can take this obstacle as an opportunity to put more money into your pocket. Here’s what you can do:

• * Look for Emerging Markets

Instead of chasing properties in already-hot markets with inflated prices, set your sights on emerging markets. These are areas that show promising signs of growth but haven’t fully taken off yet. Being an early investor in such markets could mean snagging properties at relatively lower prices before demand pushes prices up.

• * Add Value to Your Property

If you find it hard to secure great deals on buying properties, don’t panic. Look for diamonds in the rough—homes that need a bit of TLC. Investing in renovations and upgrades can add significant value to the property. You can also do this to your existing rental properties because as home prices increase, more people will be forced to rent (so you can charge higher rents).

2. Low Inventory Levels = More Challenges for Buyers

The past few years have been challenging for all home buyers across the US, because of the tight supply conditions that forced real estate investors to undergo overheated bidding wars and multiple-offer scenarios.

The housing market supply was on a downward trend even before the pandemic. Covid-19 just worsened the housing crash, prompting a nationwide migratory shift and encouraging more people to buy more homes.

Source: Trading Economics

The chart shows the US real estate market’s average months of supply (MOS). MOS measures the balance between supply and demand in the housing market. A low MOS means the inventory is lower than the demand from prospective buyers, which leads to bidding wars and higher prices.

In contrast, a high MOS means the supply is higher than the demand, giving buyers more negotiating prices and resulting in lower home prices.

As we can see, the real estate supply levels dropped drastically in 2020 and bottomed out by 2021. Although supplies improved in 2022, it’s starting to fall again in 2023. As home supply continues to be at low levels and the demand among buyers nationwide remains high, it will only put upward pressure on home prices into 2024.

What You Can Do

Although the supply of properties is low, just remember that where there’s demand, there’s always room for smart investors to thrive. Here are two solid tips to make the most out of this scenario:

• * Move Swiftly but with Caution

When properties are flying off the market, it’s like a real estate Olympics. You’ve got to be quick off the starting blocks. However, don’t let the frenzy rush you into making hasty decisions. Do your homework before you buy properties—research the market, understand the property’s potential, and calculate the numbers. Moving swiftly doesn’t mean skipping due diligence.

• * Build Relationships with Agents

In the real estate sector, having a network of real estate agents can give you the inside track. Agents often hear about off-market deals before they hit the listings. Building solid relationships with agents can help you access properties not all investors can. They can be your eyes and ears in a tight market.

3. The Number of Renters Will Rise

Home prices continue to surge, with over 75% of properties for sale becoming too expensive for the middle class. And with wages remaining low, it’s becoming like a classic game of Monopoly, where the properties are all going to the highest bidder, leaving many on the sidelines.

With more and more people deeming property prices unaffordable, the next plausible option for them is renting. The housing demand will then turn into rental properties, especially in large cities, as workers steadily make their post-Covid return and face the often unachievable costs of homeownership.

So, for investors, the surge in demand for rental properties will be like a crescendo, a symphony of opportunities. You can take advantage of this demand and have the power to charge high rental rates, allowing a maximum return on investments in the coming year.

What You Can Do

How can investors tap into this rental frenzy? Here are three strategies to look into:

• * Strategic Location Selection

In the real estate industry, it’s all about location, location, location. Identify the neighborhoods with a high demand for rentals and renters who can afford high rents. Look for areas close to job hubs, transportation, and amenities.

Being where the action is will ensure that your rental properties are not just occupied, but sought after, allowing you to command competitive rental rates.

• * Upgrade and Stand Out

Gone are the days when a shabby rental property would suffice. Today’s renters look for a lifestyle, not just a place to crash. Consider investing in upgrades and amenities that will force renters to look your way.

Think sleek kitchens, stylish bathrooms, and the oh-so-important creature comforts. By offering a high-quality living experience, renters will knock on your door, ready to pay a premium.

• * Be Flexible and Responsive

Rental investors will be flocking to the market, so being flexible and responsive can set you apart. Consider offering shorter lease terms or being open to negotiations. Respond promptly to tenant inquiries and address maintenance issues swiftly. A happy tenant is more likely to stay longer, reducing turnover costs.

Remember that if you don’t have enough time to manage all your properties, you can always opt for property management companies to help you easily navigate the market.

Seize Opportunities and Maximize ROI

The US Housing Market will continue to face challenges in the coming year, but that doesn’t mean it’s all doom and gloom for investors. Whether you’re diving into emerging markets, elevating properties through upgrades, or embracing the rental revolution, the opportunities are yours for the taking.

If you need assistance in managing your properties to enable you to make strategic moves and lucrative deals, our team at Logical Property Management can do the heavy lifting for you. Contact us today!