Paletz Law: Looking Ahead
January 24th, 2024 | By: Matthew I. Paletz, Esq.
As was the case in 2023, decisions by the Federal Reserve will determine a lot of the economic health of the housing industry in 2024. From new multi-family builds to refinancing, mortgage rates and housing availability, the Fed still hovers over the economic performance of the U.S. – Oh by the way, it’s an election year too.
While many are predicting lower rates ahead, the Fed has only publicly agreed to hold the line on rates, with one economist calling predictions of interest rate cuts, not unlike the movie “Groundhog Day” with predictions repeating themselves over and over. Plus, a sudden increase, above what was expected in the December inflation numbers, will not make that decision any easier.
Because of the Fed’s influence and being a presidential election year, no matter what the result, this will have little effect on the low volume of residential sales and subsequent rent demand ahead. However, if mortgage rates drop, more buyers on the street could qualify for homes but home prices are still climbing.
The Bottom Line: Uncertainty in the housing market will continue to drive more people seeking rental opportunities for the foreseeable future. But while many are predicting rents to decrease because of new properties coming online, that scenario will be short-lived if viable. Most of the multi-family properties coming online this year were built with money secured during the pandemic at extremely low-interest rates. Building all but stopped in 2022 and 2023 when interest rates climbed, so we could very well see more demand than supply for rental properties by the end of the year.
The information contained in this article is only meant to be a basic overview and should not be construed as legal advice. Readers should not act upon this information without the advice of an attorney. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or otherwise be disseminated without the prior written consent of Paletz Law.