After a year of rising mortgage rates, inflation affecting American sentiments and typical buyer-seller patterns, there’s sign of optimism and confidence in consumers. Here’s why I think the frozen housing market is poised to reignite in 2024.

Inventory Shift With Interest Rate Reductions

With interest rates gradually declining from their 7.5% year-over-year highs as of December 2023, Americans are experiencing some relief, and homes are selling 50% faster, highlighting a gradual uptick in buyer demand.

I anticipate this activity to heat up as hedge funds and private investors like Blackstone express strong interest in single-family homes, layered once further as we anticipate Fed rate reductions through 2024. With the potential for investors and homeowners to see reducing rates and experience some relief, days on the market will likely trend down and home values will increase.

Blackstone Heats Up The Market

I’ll start by noting that Blackstone, a massive buyer and developer, signed the acquisition of Triclone for $3.5 billion investment, to transition the company from public to private. 

While this is notable, it’s even more notable to highlight their signing of a billion dollar development pipeline across the US and Canada positioning them as the largest single-family home buyer and owner in North America. This is a major play that could impact the shifting market dynamics in 2024, especially after a period of dormancy in Blackstone’s acquisitions.

Increase In The American Sentiment Marker

One might question a bounce back of the American sentiment given rates and inflation, but factors point to this being the case. So what are the factors and how does this contribute to fueling activity in the market? 

The Consumer Sentiment Index, as measured monthly by the University of Michigan, surged significantly over the past few months, nearly doubling from its lowest point in June 2022. This surge is indicative of consumer optimism. So what might be specific factors leading to this increase in sentiment? 

Let’s examine the broader macroeconomic trends quickly. First, the predicted 2023 recession never occurred, followed by no string indicators pointing to one in 2024 either. Additionally, wage growth continues to outpace inflation, as likely factors influencing this sentiment.  

If these data points continue, this typically leads to increased consumer confidence and growing market optimism. This in turn could translate to higher market inventory as consumers once again consider selling, presenting more opportunities for investors and homeowners in 2024.

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