Is Real Estate Still a Dependable, Inflation-Resistant Investment as We Approach 2024?

Since 2023, everyone has wondered which will rise faster: mortgage rates or home prices? Usually these two work in opposition and help offset one another; but in 2023 mortgage rates reached record highs while housing prices continued their rapid increase. Now though, nearing the end of 2023 the race seems to be slowing and taking an unexpected turn as mortgage rates have trended down quickly.

These events lead us to ask: Will real estate still be an inflation-proof investment in 2024? Rather than consulting our Magic 8 Ball, we’ll review insightful statistics and what experts expect for the coming year – so you can make an informed decision as to whether real estate investing should remain attractive in 2024 or not (spoiler alert: it looks promising!)

Let’s Talk About Now: The Current Market
Before diving into the future, let’s take a step back to consider what we know now about housing market statistics provided by the National Association of Realtors (NAR).

Median Home Sale Price: Year over year, September saw an increase of 2.8% year-on-year to a median existing-home sales price of $394,300 (this marked its third consecutive month-over-month increase).
Housing Inventory: At the end of September, 1.13 million registered units had been registered – marking an increase by 2.7% year-on-year but an 8.1% decrease when measured against August sales paces; current unsold inventory supplies totalled 3.4 months at current sales pace (an increase from August’s supply of 3.30 months).
As is well known, the housing market relies heavily on the Federal Reserve’s (the Fed’s) set rate, which has recently been elevated in order to combat high inflation rates.

As interest rates rose, borrowing costs (mortgage rates) became too costly, narrowing homebuyer markets and discouraging current homeowners from selling which would forgo lower locked-in rates.

As of October 2023, inflation stood at 3.2% – still higher than the Federal Reserve’s desired inflation target of 2% – however many analysts speculated that since inflation growth had slowed significantly compared with expectations that perhaps rates may no longer need raising by the central bank.

Lawrence Yun, chief economist of the NAR, expressed optimism for 2024 due to low mortgage rates; in a press release he predicted home sales could surge by as much as 15% next year – great news for real estate investors!