December is the perfect time of year to reflect on the year that was and look ahead at what the future might bring. 2023 has certainly been challenging as investors grappled with runaway inflation, declining home values, falling rents, high interest rates, and general economic uncertainty. However, we did not experience the crash many economists feared, and have thus far avoided the worst case scenario. As we look forward to 2024, we see lower inflation, a resilient jobs market, and even the potential for interest rate cuts. With the possibility of an economic “soft landing” coming into focus, we will look at a few real estate predictions for next year, outline some exciting changes coming to our software, and look to leave you with our best holiday wishes.
November Jobs Report - In November, nonfarm payrolls exceeded expectations, growing by 199,000, surpassing the estimated 190,000, and outpacing the October gain of 150,000. The unemployment rate declined to 3.7%, beating the forecast of 3.9%, while the labor force participation rate increased to 62.8%. Average hourly earnings, a key inflation indicator, rose by 0.4% for the month and 4% from a year ago, aligning with expectations. Notably, the health care sector experienced significant growth, adding 77,000 jobs, while other industries such as government, manufacturing, and leisure and hospitality also posted gains. Despite mixed market reactions, with stock market futures slightly negative and Treasury yields surging, the report indicates a robust but moderating labor market. The Federal Reserve's focus on inflation remains critical, with expectations of a potential rate cut in the future. The report coincides with a critical period for the U.S. economy, showing signs of potential slowdown despite defying recession expectations earlier in the year. Policymakers aim for a soft landing, and consumer spending, a key factor, has held up reasonably well despite concerns about the end of stimulus payments and rising interest rates. The upcoming Fed meeting will provide insights into how officials perceive the economic landscape, especially regarding inflation and the trajectory of interest rates.
Weekly Jobless Claims - Weekly jobless claims showed a modest climb in the week ending December second. Initial claims came in at 220,000, slightly ahead of the revised 219,000 we saw last week and on par with the 4-week moving average. This mild uptick in unemployment filings mirrors a moderate nationwide trend, hinting at a gradual slowdown in the labor market. The recent report from the Labor Department showcased a rise in unemployment claims alongside a decline in late November's unemployment rolls, indicating a nuanced view of the job market's trajectory. Economists suggest that despite this moderate increase in jobless claims, there isn't a substantial cumulative deterioration in the labor market that might prompt immediate actions by the Federal Reserve. Locally, however, Utah experienced a larger increase, with initial claims reaching 2,330, marking a 73% jump from the previous week.
Consumer Price Index - The next release of the Consumer Price Index won’t arrive until December 12th, which just missed today’s publication date. The same thing actually happened last month as well, but we are happy to report that the November 14 report showcased a stagnation in the consumer price index (CPI) from the previous month and only a 3.2% increase from a year earlier, both figures below Wall Street estimates. Excluding volatile food and energy prices, the core CPI rose 0.2% and 4%, marking its lowest annual increase in two years but still exceeding the Federal Reserve's 2% target. This development sparked a rally on Wall Street, with traders largely removing expectations of Fed rate hikes. The flat CPI stemmed from declining energy prices, balancing out a slight food index increase. Notably, shelter costs rose less than previous months, signaling a shift in the housing market, while vehicle costs decreased. This report prompted market optimism, although Fed Chair Jerome Powell's recent remarks highlighted the Fed's vigilance on inflation, casting some uncertainty over future rate moves.
Fed Meeting - The next meeting of the Federal Reserve isn’t scheduled until December 12-13 so we will need to wait a bit longer for the latest insights into the Fed’s strategy. To recap the last meeting, the Federal Reserve opted to maintain the key federal funds rate within the range of 5.25%-5.5%, marking the second consecutive meeting without a change after 11 successive rate hikes. Against a backdrop of a growing economy and persistent inflation, the Fed upgraded its assessment of economic conditions, emphasizing the imperative to reduce inflation to 2%. With a cautiously optimistic outlook, experts speculate a potential rate cut around June 2024 if weaknesses in the labor market persist. The Fed's upcoming December meeting will determine implications of the latest decisions and their potential impact moving forward.
2024 Outlook: A Comprehensive Forecast of Real Estate Trends
Each new year brings with it a sense of uncertainty about the future. As human beings who like our world predictable, we look to forecast, plan, and outline the future to help make sense of the unknown (often to humorous results). Real estate forecasts are a part of this process and we’ve assembled a few expert opinions on what 2024 might bring.
Zillow's 2024 Housing Market Predictions:
Zillow's outlook for 2024 centers on an anticipation of a notable increase in available homes for sale. This projection stems from the expectation that homeowners may finally come to terms with the persistence of high mortgage rates, prompting them to list their properties after waiting for historically low rates from 2021 to return. The underlying narrative suggests that the inventory shortage might gradually ease, giving potential homebuyers more choices and potentially mitigating the upward pressure on prices. Zillow’s experts predict home values will essentially hold steady in 2024, falling 0.2%.
While Zillow acknowledges the persistent challenge of affordability in the housing market, the forecast offers a glimmer of hope, suggesting a marginal improvement in affordability. However, this slight respite may not significantly alleviate the financial strain on prospective homebuyers. Additionally, the forecast emphasizes a trend where families might opt to rent for more extended periods due to the enduring expense of home buying.
Furthermore, Zillow's prediction hints at a shift in buyer preferences toward properties that require renovations, fostering a market where do-it-yourself upgrades and repairs become more prevalent. This trend could potentially impact the choices available to buyers seeking properties needing renovation work.
Realtor.com's Housing Market Forecasts:
Realtor.com’s 2024 National Housing Forecast starts by highlighting an expected slight decrease in home prices, a shift that signals improved affordability for potential buyers. They predict a larger 1.7% decline in home values than Zillow, marking a notable change from the steep price increases seen in previous years. The forecast also mentions the potential impact of these price adjustments on different regions, suggesting that the changes might not be uniform across all areas.
Additionally, the report anticipates a stabilization in home sales, with a modest increase from the low levels experienced in 2023. This reflects a balancing act in the market, where the demand and supply dynamics are expected to be less volatile than in recent years. The factors expected to influence this trend, include economic conditions, mortgage rates, and overall buyer sentiment.
They also predict a continued decline in the number of homes available for sale, a trend that has been persistent in recent years. This scarcity is expected to maintain some level of competition among buyers, although less intense than in the peak pandemic years.
In the rental market, they are forecasting a slight slowdown in rent growth (-0.2%), which could bring some relief to renters but won’t represent a serious threat to landlords nationwide.
Apartment.com's 2024 Rental Market Projections:
Apartment.com's projection revolves around the cooling rental market observed in 2023. This period saw a decline in year-over-year rent growth nationally, plunging to negative territory. The report highlights this cooldown, indicating that the national median rent today is marginally lower than a year ago.
The forecast from Apartment.com anticipates an influx of new multifamily apartment units entering the market in 2024. This surge in new construction, the most significant in decades according to Census Bureau data, might lead to increased inventory and competition among multifamily operators. However, despite this surge, the projection suggests that rental growth might remain in the low single digits, with the vacancy index expected to rise modestly.
Additionally, Apartment.com's outlook emphasizes systemic barriers to homeownership that could prolong the duration of renting for many households. It underlines the financial impracticality of buying homes in the current market, contributing to an extended period of renting.
Differences Between Projections:
The varying projections from Zillow, Apartment.com, and Realtor.com highlight several key differences in their assessments:
Inventory Expectations: Zillow and Apartment.com present more assertive forecasts regarding the increase in housing inventory, whereas Realtor.com's projection seems more measured and cautious.
Affordability Outlook: While all three forecasts acknowledge the persistent challenge of affordability, Zillow hints at a slight improvement, Apartment.com underscores systemic barriers to homeownership affecting rental demand, and Realtor.com suggests a potential stabilization or decrease in home buying costs.
Of course, it’s important to remember that these are just projections, and at the end of the day, no one knows what the future will bring. With that said, it’s comforting to see stable projections following the volatility we’ve seen in the last few years.
Utah Real Estate Market
The Utah real estate market saw a shift in November, reflecting some interesting trends. The median sold price dipped slightly from October to $562,750, marking a 2.13% decrease. Comparing year-over-year data, the market showcased a subtle 1.28% decrease in median prices, signaling a stable yet evolving landscape for home prices. Sold counts in November saw a sharper decline, dropping by 13.26% compared to the previous month and a more substantial 14.62% decrease year over year. This decline indicates a shift in buyer activity, likely influenced by high interest rates. On the supply side, the average number of listings also showed a downward trend. November saw a 6.91% decrease in listings compared to October and a notable 20.34% decrease year over year as sellers patiently look toward listing in the spring in anticipation of more buyer demand.
Median Sold Price*
Average # of Listings*
November: $ 562,750
Monthly Change: Down 2.13%
Monthly Change: Down 13.26%
Year Over Year: Down 14.62%
Monthly Change: Down 6.91%
Year Over Year: Down 20.34%
* all graphs/data are for single-family homes in Salt Lake, Utah, and Davis Counties.
The rental market in Salt Lake City has continued its decline, though at a slightly slower rate than before. The year-over-year decrease is now at 2.6%, which is a more pronounced drop compared to the previous report's 5.4% decline. Orem, on the other hand, has shown a bit of resilience, increasing 1.0% over the course of November, and is now essentially flat over the past 12 months. North Salt Lake and Murray both experienced sharper declines in median rent in November, adding to their year-over-year decreases, which have continued to worsen compared to the previous report.
It's interesting to note that while some areas like Orem saw a positive change in the short term, others such as Salt Lake City and North Salt Lake experienced ongoing decreases. This could suggest localized shifts in demand and perhaps varying factors influencing rental prices across these different cities within Utah.
Month Over Month
Year Over Year
North Salt Lake
Salt Lake City
*Rental data provided by apartment list.
Rent growth slows as colder weather begins - Rent growth continues to slow as the colder, crisp fall weather rolls through most of the country. National median rent growth slipped by 0.7%, marking the third consecutive month of decline, now resting at $1,354. Year-over-year, rent growth decreased by 1.2%, with 66 of the largest 100 cities experiencing drops. This seasonal decline aligns with trends observed since 2018, including the record growth in 2021, and year to date, rents have only risen by 1.2%, marking one of the lowest growth rates since 2018, except for 2020. Cities in the Sun Belt feature prominently among the slowest-growing metros, with Austin, Texas, holding the title of the slowest growing over the past six and 12 months. Conversely, faster-growing rental markets span the U.S., with Providence, R.I.; Grand Rapids, Mich.; and New York exhibiting 3% growth rates over the past six months, while Miami leads as the fastest-growing rental metro over the last three years, followed by Tucson, Ariz., and Tampa, Fla.
Supply Growth Pushes Multifamily Rents Down - Multifamily rent growth in the U.S. has turned negative due to a surge in supply outpacing demand, particularly in thriving Sun Belt cities. Despite this, apartment demand remains robust, driven by a strong economy and the increasing unattainability of homeownership as mortgage rates rise. Concerns arise regarding potential slowdowns in job growth and economic activity impacting renter activity. While absorption remains high in cities like Austin, Phoenix, and Orlando, rent growth has reversed due to excessive supply and affordability issues. The report anticipates a drop in multifamily starts, potentially leading to another supply-demand imbalance and higher housing inflation after the current surge. The Federal Reserve's rate adjustments aimed at managing inflation without causing a downturn are acknowledged but are noted to bring unintended consequences affecting the economy and commercial property market.