“So, what’s going to happen with real estate next year?”
If you’re hearing this question from your clients, friends, family, and colleagues this time of year, you’re in good company. Ryan Serhant hears it every year around this time, so he posted a Twitter thread with his honest take on what we can expect in the coming year.
And like every honest, knowledgeable real estate professional out there, he prefaces his forecast with a gentle disclaimer. There is no crystal ball, and he’s not pretending to be infallible.
That said, he does have over 15 years of experience, with over $6B worth of luxury real estate transactions. So, while he openly admits his forecast is 100% educated guesses, his insights into the market are well worth taking into account.
#1— “EVEN GREATER BIFURCATED MARKETS”
Just to clarify, something that is “bifurcated” is split into two parts or branches.
Serhant explains market bifurcation in the YouTube video he references in his Tweet:
“Market bifurcation happens when disjointed market movements, such as growth and value investments, move in different directions—or when high-quality and low-quality securities move out of sync, causing one to perform much better than another.”
As Serhant points out, some industries are “returning to pre-COVID patterns,” while others have permanently changed and are moving toward a new post-COVID normal.
Think about how remote work has changed the need for office space—and how, especially during COVID, online marketplaces replaced brick-and-mortar retail. After lockdowns, there was a return to brick-and-mortar shopping and in-person office use—but not to the same extent.
And now, we have a push for converting unused office/commercial space into residential units to increase housing supply. But, as Serhant points out, not all companies are letting go of their office space; some are even asking for more.
We are right now in an office space that we probably should not be in. But we’re in it because of the repurposing of commercial space. - Ryan Serhant
#2— “THERE WILL BE MORE NATIONAL SEARCHES”
Thanks to the increase in remote work, buyers are looking well beyond their current market when shopping for homes. And Serhant expects an increase in those nationwide home searches.
As fewer and fewer are held to a specific location by the requirement to commute (every day or at least every week) within an hour of their workplace, more people are expanding their home search well beyond the radius they would have considered before COVID.
Some are moving to more affordable markets to see how much home they can get with the housing budget they have. Some are moving to live closer to family or friends. Some are moving to areas they’ve dreamt of moving to for years.
And these buyers are using digital tools and platforms in their home searches more than ever.
So, as we think about pricing, how to value property in 2024, we now have to look at comps on a national level… it’s no longer ‘What is this home worth in this building or in this block?’ It’s now ‘What do these dollars get us in this building or on this block—in this town, in this community, in this state—compared to where most people have now moved to?’ So, what does $1M get you here in New York City? But now I also have to look at it compared to what you can get in Long Island, Connecticut, New Jersey, Pennsylvania, and South Florida—as a comp.
