Real Estate Things to Know February 2024

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Interest Rates

Mortgage rates have just hit their highest for 2024. According to recent Freddie Mac data the average mortgage rate for a 30 year fixed is now 6.77%. While rates have ticked up slightly from January, the overall trend doesn’t appear to be up – November’s rate was a full percentage point above today at 7.76%. Unemployment is still at a historic low of 3.7% and hiring still appears to be strong in many sectors. Given this backdrop, it’s not clear what the Fed will do with interest rates when they meet again on March 19th, common sense says don’t bank on rates changing anytime soon.

Impact on the Housing Market

First quarter of 2024 appears to be going strong, I’m seeing more sellers and more qualified buyers enter the market. Homes don’t appear to be selling at the impossible pace of 2022, but the market definitely appears to be moving at a healthier pace. The chart above of 3 of our local markets appears to support this, and shows a jump in listings and a smaller percentage increase in time to sell. Are the predictions of easing interest rates luring more buyers being somewhat matched by more sellers coming true?

2024 Home Trends

One of the strongest trends I’m seeing coming up in 2024 is more efficient use of space, this is being driven by the increasing prices of the last few years. Real estate prices have shot up meaning buyers cannot buy the same size home as they may have done 3 or 4 years ago. What does this actually mean? We’ll see it in several areas particularly in spaces that can pull double duty such as an office or kids’ playroom that can double up as a guest bedroom when needed or a home workout room. Built in storage and clever storage solutions are also in demand as smaller homes means less room to put all that clutter – well designed built ins are definitely in demand. One other area that is up and coming is changing use of the home office – in 2021 we all wanted a dedicated space to work from home and do Zoom calls, that we could ideally shut off and walk away from at the end of the day. As more people are doing side gigs from home, these home office spaces are pulling double duty in the form of craft rooms and storage rooms as well as offices.

Short Term Rentals

Our area traditionally had a lot of short term rentals, with investors often purchasing a home specifically to rent out short term. Some have done really well with the model, but there have been waves over the few months. Firstly the fees AirBnB, VRBO and others have been charging are becoming exorbitant, and when coupled with local taxes have made it difficult for short term rental investors to turn a worthwhile profit. I talked to an owner in Holmes Beach recently whose revenue was over $100,000 per year, but fees and taxes were driving her to sell and invest elsewhere. One solution investors have turned to is direct marketing through social media and other outlets – while not as instant or high volume as the big platforms, and often more work, it does give investors opportunity to earn more and put more back into providing great experiences for renters. One other point here is that sentiment in some areas is turning against short term rentals. There is a perception that short term rentals are reducing the housing inventory for people who want to live and work in the area, pushing prices up and making home ownership even more expensive. AirBnB alone states that have over 5,000 units available in the Tampa Bay area. This is definitely an area to watch – were short term rentals just fueled by the ease of market access through the platforms or is it really a sustainable business model that is here to stay?