Headlines

What’s new in the world of Real Estate

• The state of the luxury market

• Farmland values flatten

• Homebuyers get less pessimistic

• A housing bubble down South?

Plus: CRE trending up, pending sales down, single-family rentals go upscale, and more.

Listing of the week: A Superior lighthouse.

Performance

_{as of market close on July 8}

Partner

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Market Updates

The luxury real estate market remained strong in the first half of 2024 and is likely to stay that way. The Global Luxury Mid-Year Outlook from Christie’s found that scarcity of supply and the ability of high-net-worth individuals (HNWI) to remain unaffected by macroeconomic conditions has left the luxury market in good shape. High interest rates and inflation have slowed the market somewhat, but there is optimism that both indicators will drop in the coming year. A bigger concern is geopolitics, as ongoing wars and elections could impact government policies. Overall, the report says, “2024 has also exceeded expectations in many regards, and the market feels like it is on track for a solid second half.”

Farmland values have started to plateau after years of growth. The latest report from the Farmers National Company points to high interest rates and declining grain markets as the cause of the stall. While much of the market has held its value, there are some areas, particularly in the Eastern part of the country, that have seen single-digit decreases. However, there is still high investor demand for farmland, and supply remains limited. The report concluded that “strong demand for ag land and its historical appreciation in value will continue to support the current values as we progress into the second half of 2024.”

Potential homebuyers’ sentiment improved slightly. The Fannie Mae Home Purchase Sentiment Index (HPSI) rose 3.2 points to 72.6, as 19% of consumers think that it’s a good time to buy a home, up from 14% in May. There was also a slight increase, from 64% to 66%, of consumers who believe that now is good time to sell a home. While overall sentiment did go up, it is a far cry from pre-pandemic levels, and a majority of people believe that both housing prices and mortgage rates will climb in the next twelve months, indicating long-term pessimism about the market.

The Southern U.S. may be facing a housing market bubble. The significant rise in home construction over the past few years as a response to pandemic-era migration is now causing a glut in supply. This oversupply, combined with lowered demand, has led to the highest level of new homes on the market ever - more than in the pre-2008 bubble. The median listing price in some Southern cities has already declined, and the combination of high inventory and high mortgage prices could even cause the market correction to turn into a market crash.