2024 Will Bring Bounty Of Choices For Homebuyers, But High Prices Cast A Long Shadow On Rental Market

After a few years of slim pickings, homebuyers will likely have more options in 2024 as homeowners accept that mortgage rates aren't falling any time soon.

But prices will remain high, keeping pressure on the rental market to cater to families who will be renting for longer, according to Zillow.

"I expect the beginning of a long healing process to kick off in the housing market next year," Zillow Chief Economist Skylar Olsen said. "We know there are a huge number of households in prime homebuying ages waiting for the winds to turn in their favor. While still presenting challenges, the market will be better for buyers with more homes to choose from and improved affordability."

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Buyers who want to live in the homes they purchase will have to compete with house flippers for homes that need a little work. Though Zillow expects more inventory to hit the market in 2024, it will remain much lower than prepandemic norms so buyers will be willing to overlook flaws like an outdated bathroom or kitchen.

Flipping houses will be more difficult in 2024 than it has been in previous years because of the higher cost of buying houses and the more it costs to borrow money.

But even as it becomes easier to find and purchase a home, many people will continue to rent. They'll likely find better deals than they have in the past because recent deliveries of new units to many markets likely will keep rent growth down and concessions high.

Demand for rental units in areas with easy commutes to downtown New York City or Midtown Manhattan is high, and Zillow expects more markets will follow suit, with rental demand surging near downtown areas.

Demand for single-family rentals is expected to grow as families look for more affordable options that include amenities such as a backyard or not sharing walls with neighbors.

Advancements in artificial intelligence (AI) are expected to streamline the home buying and selling journey. Zillow expects new tools and technologies designed for real estate agents will give them more time to connect with more clients in face-to-face interactions. While agents have been using AI to help with writing listing descriptions and creating 3D content for properties for sale, new developments are expected to emphasize visual and multimodal capabilities.

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