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HOME PRICES IN 2024:
The 18-Year-Cycle:
This was originally identified by the British Real Estate Economist, Fred Harrison, and by using these techniques, he correctly predicted the housing market crashes in the early 1990s and in 2008 (a full decade before they happened). Currently, he believes the his next “housing crash” is predicted to occur in 2026.
As he explains, each 18-year cycle consists of a 14-year expansion, where prices rise, followed by a subsequent 4 years where prices fall. At first, demand is low, the market is uncertain, banks aren’t lending a lot of money, and new constructions somewhat stall. However, in the next phase, demand begins to pick up, rents begin to increase as inventory slowly gets bought, and construction begins to pick up to satisfy the extra demand.
In the third phase, the market starts to get overheated…prices rise at an unprecedented rate, and more inventory begins to flood the market. Some even call this “The Winners Curse” as new people buy in, expecting profits to be a sure thing.
However – in the fourth phase, demand begins to fizzle out, overbuilding causes prices to drop, banks scale back lending, buyers wait because they believe prices will continue falling, sellers reduce their asking prices, and eventually, the cycle starts over again.
Where Prices Are Falling In 2024:
Currently, Texas and Florida are leading the nation with the largest price drops. As Business Insider reported, “Both states have been building more homes than any other part of the US, in a race to make room for pandemic-era newcomers.” Or, basically: the states that saw the largest pandemic “Boom” were also the same areas that saw the most development, most price growth, and most over-saturation to the point where – now – there’s not the same appeal, it’s no longer the most cost-effective, and there’s more demand than supply.
Realtor.com also reported on the “Top 11 Markets” that are starting to see some of the largest declines. At the top of the list, we have Miami with an 11.2% drop year over year, Denver with a 6.3% drop, Seattle at 5.5%, Kansas City at 4.9%, Oklahoma City at 4.3%, and San Jose at 4%:
Finally! 11 Cities Where Home Prices Are Falling—and the Steepest Drop Will Shock You
Even Manhattan Real Estate Prices are beginning to turn the corner, with the average sales price falling 3% thanks to rising inventory. In fact, there’s now 9.8 months worth of supply listed for sale, meaning they’re officially in a “buyer’s market.”
Shrinkflation For Housing:
Lately, homes are getting smaller for the sake of reducing prices. Previously, builders would want to maximize the square footage on vacant land for resale value, so they’ll typically max out whatever they’re able to construct.
However, a recent analysis found that single-family homes have decreased in size to the lowest levels since 2010, and builders are beginning to focus their efforts on constructing more starter homes. Zillow even reported a 9.5% increase in single-family homes with fewer than 3 bedrooms.
Overall, though – outside of a few markets that have declined – nationally, average prices have still risen 6.3% year-over-year, existing homeowners are paying 21% more for insurance than they did just a few years ago (again, thanks to higher building costs) and in the short term, that’s unlikely to slow down.
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