Headlines

What’s new in the world of Real Estate

• Denver is the hottest housing market in the country

• Housing prices could rise as we head towards spring

• Cash buyers are coming for commercial real estate

• Luxury real estate sales are heating up

Plus: The least affordable city for renters, the Bay Area is coming back, and more.

Listing of the week: The most expensive property on the market in the U.S.

Performance

Market Updates

Denver was once again named as the hottest housing market in the country. This comes from a U.S. News & World Report ranking which considers buyer demand, housing supply, unemployment rate, and foreclosure rate, among other factors. The Mile High city ranked first for the second straight year, followed by Virginia Beach and three North Carolina cities (Raleigh, Durham and Charlotte). On the flip side, the two lowest ranking markets were both in Hawaii - Honolulu and Lahaina. Cleveland ranked #1 on its “markets to watch” list, as it showed the greatest improvement in the index from June to December 2023. These rankings and rankings like them are never meant to be definitive when considering where to invest, but are helpful to take into consideration.

Home prices could rise as we get closer to the spring homebuying season. Every year, as the weather heats up, the housing market tends to follow. Redfin’s chief economist believes that a strong spring season could cause home values to rise by 5% before the end of the year, while Zillow’s chief economist puts the number at a more modest 3.6%. They both predict that the annual spring housing boom will be stronger and longer than last year’s. For sellers, this is a good sign, and now could be the time to put a house on the market, while buyers might be better off waiting until after the spring rush to jump into the market.

Cash buyers are starting to target distressed commercial properties. Because of the rise in interest rates, buyers who have stockpiled cash are finding deals as desperate building owners are starting to sell at discounts. With over $900 billion of outstanding commercial real estate loans coming due this year, there could be even more distressed properties available if defaults lead to a glut of properties for sale. Global private equity funds have been sitting on over $500 billion of cash, while major investment firms are raising funds specifically to purchase distressed properties. This is also relevant to smaller investors, however, as the ability to buy property without taking out a high-interest loan can make buildings significantly more attractive, particularly at a discounted price. The current interest rate environment could be creating buy-low opportunities that could pay off in the long-term.

The market for properties valued at over $1 million has been heating up. Luxury real estate tends to be somewhat insulated from the market as a whole, because of the makeup of luxury buyers and sellers. The fourth quarter of 2023 saw a 4.2% increase in sales of single-family homes in the category, and a 14.2% increase in sales of attached properties. There is also increasing optimism, as 72.8% of luxury consumers surveyed felt the 2024 real estate market would be as good or better than it was in 2023. Not surprisingly, the number one factor for buyers is location, rather than price. Additionally, the number of international buyers interested in luxury U.S. real estate increased by 25% from 2022 to 2023. Putting it all together, the market for properties at the top of the market looks poised for a strong 2024.