THE FED RESERVE RATE & 10-YEAR TREASURY WILL DROP
INSURANCE RATES WILL INCREASE
Overall, I foresee the following coming in 2024: 1. The Federal Reserve rate will drop from today’s 5.25 - 5.50 to 4.50 - 4.75 with 3 reductions of 25 bps beginning in May until Nov 4. 2. 10-year treasury will continue to decrease from 3.85 to 2.50 by Nov 4. 3. Rent growth will remain challenging with negative to zero, but the Midwest will enjoy 2-3% rent growth. 4. Vacation rentals will continue to be limited in markets like FL coast, New York, Boston due to neighborhood lack of support. 5. Property management will continue to reduce the cost of services on 100 plus units from 3 to 2.75% of EGI. 6. Insurance rates will start to decline in TX and FL. 7. Apartment sales will increase 26% YOY. 8. More cities across the US will implement rent control.
There are several factors at play in the 2024 real estate market: 1. The economy and job sector will continue to produce strong headwinds that support a robust apartment industry. 2. The current pipeline of new-construction apartment deals scheduled for 2024 delivery is indicating an oversupply which will put downward pressure on rents. 3. New construction will be constrained by high interest rates and material costs, both of which are starting to decline. 4. Debt resets at higher interest rates will prompt mortgage defaults and eventual foreclosures. 5. Insurance rates will continue to dramatically increase beyond inflation. 6. Inflation will flatline or be a modest 2% by end of 2024.
INSURANCE RATES WILL CONTINUE TO DRAMATICALLY INCREASE BEYOND INFLATION.
RENT GROWTH WILL REMAIN CHALLENGING.
Alexandra Alvarado Director of Marketing & Education AAOA Connect with Alexandra
Margaret Stagmeier Landlord and Author of Blighted: A Story of People, Politics, and an American Housing Miracle Read Margaret’s Book
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