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                29 DEC

                Real Estate Crystal Ball 2024 – The Ross and Rachel Market

                Real Estate Crystal Ball 2024 – The Ross and Rachel Market

                I always thought going South on I95 from Boca Raton to Miami had the most deranged drivers in the world. Motorcycles going 125 mph and those bizarre little white dividing poles that keep your heart palpitating when you get too close.  Turns out that’s more like a slow sloth compared to driving in Costa Rica.

                There are no left turn signals in Costa Rica no matter how busy the traffic is going. There are also no lanes.  You kind of line up and then all of a sudden to the left of you appears a Sanford and Son pickup with 2 goats. One goat standing and one goat lying down. In between a little scooter, scoots in. Then another car to the right. Finally off to the races if there is an opening. Furthermore, its all hills and “stepping on it” doesn’t do much. So, just yell, “ahhhhh” and pray.

                Pura Vida.  In Costa Rica it stands for the simple life. The sloth which takes something like 3 hours to get down a tree is the animal that the country showcases as the way of life. Considering the sloth sleeps 20 hours a day, that only leaves an hour to do anything else if it decides to take the 3 hour adventure to the bottom of the tree. Like get a 1/3 way back up the tree. On the other extreme of favorite Costa Rica creatures is the hummingbird, moving a million miles a minute.  Driving in Costa Rica is insane like the hummingbird zigging and zagging. Not so Pura Vida.

                I just returned back from Costa Rica. Our son, Sam, just graduated from UCF and will be joining us at Echo Fine Properties. As a celebration, a holiday vacation was in order. The nature is beautiful with sloths, hummingbirds, volcanoes, and of course great dark roast coffee.

                My Crystal Ball forecast for 2023 that I wrote last year predicted that 2023 would be a “pause”. I could have said “sloth” and been just as accurate.  Sales activity was slow. The Fed started raising interest rates to curb runaway inflation due to lenient Covid incentives and artificially low interest rates. Inflation hit 9.1% 20 months ago. The Fed raised the borrowing rate exponentially and interest rates skyrocketed from the mid 2’s to 8% in November 2023.  As a result during this time, real estate activity slowed to a crawls pace.  Sellers have hung on to their Lord of the Rings “Precious” 2.9% rate.  This slowdown resulted in what I called a “stalemate” earlier this year.

                Just like Costa Rica though, one look can be a sloth and the next the hummingbird. That is where I see the real estate market going in 2024. We are now on the cusp of a new marketplace. I’m referring to this as the “Rachel & Ross Market”.

                Month by month, week by week, day by day, hour by… (you get the drift), pent up activity is building. Rachel & Ross from “Friends” had 9 seasons of pent-up energy. Just like the volcanoes in Costa Rica, that energy needs to go somewhere.  In season 10, the volcano finally erupted. (If you haven’t watched the show or are like the girl in the new movie, “Leave the World Behind”, don’t read on as spoiler alert!) Ross and Rachel became more than “friends” and got together.  And that’s where the housing market, especially in Palm Beach County and the Treasure Coast, is going.  Would be buyers and sellers staying in their home until the rate differential becomes de minimis has near hit the 2-year mark.

                I was interviewed by the Palm Beach Post on the matter.

                Here are 10 reasons why the “Ross & Rachel Market” should blow, and you’ll want to be more than friends and fall in love with a forever home.

                1. The demand of buyers sitting on the sideline because of interest rates and first-time homebuyers renting or living at home is the pent-up activity that’s building. People want to move and every day that goes by, it grows.
                2. Interest rates have already fallen 1.5%
                3. The FED indicated it will lower the bowering rate 3 times. This should get it into the 5% territory. Once there, the differential isn’t such a big deal anymore.
                4. Prices have stabilized and have not kept up with inflation.
                5. You have a choice now. If the market blows, you will not.
                6. The condo market will be in a buying frenzy 12 months from now. Condos under state law have had to have milestone inspections and proper reserves in place by December 31, 2024.  Many have already done so. This creates safety, cost certainty and much more mortgageable condo purchasing. Condo sales activity has lagged considerably and sales of 25 and older condos have built up inventory. Watch for this market to start to heat up. Come 2025 it should be feeding frenzy.
                7. Inventory in areas east of 95/Turnpike in Palm Beach County are out of land. Since supply cannot increase with demand, prices should start to go up and will cause more pressure on homes in West Palm Beach County and the Treasure Coast.
                8. Insurance costs should stabilize both in the single-family home market and in the condo market. Both markets will benefit from laws enacted in the spring of 2023. Even more so in the condo market as a result of that new regulation.
                9. You can date the mortgage interest rate now, but you can’t renegotiate the price of the house later on. Meaning, if you take a 6.5% interest rate on a home and it drops to 5%, then you can refinance. However, once it drops into the 5’s, don’t expect prices to stay where they are at. You can’t have it both ways.
                10. Talking to people in our business nationwide and financial experts I know, expect to see a 10-20% jump in prices assuming there is no big world surprise event once interest rates drop to the low or mid 5%. Housing has an estimated 4 million home shortage, a shortage that can’t be corrected quickly. Our special area in South Florida should jump more than the rest of the country due to more population growth and the limited supply.

                Don’t forget you can see all statistics including Population and Mortgage Rates, county by county, in real time on our website.

                 

                If you’d like to confidentially know how much equity you have in your home and would like to discuss strategies for buying/selling, send me an email.

                Here is to Pura Vida, in 2024!

                 

                 

                Jeff Lichtenstein, originally from Chicago, got his start in the home furnishings textile business where he traveled over 35 weeks a year selling fabrics. After the family business was sold, Jeff moved to Florida and became a real estate agent. Today he is the owner and broker of Echo Fine Properties, a luxury residential brokerage voted best brokerage of the year. Jeff manages a non-traditional model of real estate that mimics a traditional business model. Echo has 80 agents, an average of one million dollars per transaction and over 500 million in annual sales. Between traveling for work and annual family trips to national parks with his wife and 2 now adult children, Jeff has visited 49 states. He is also one of the few Chicago White Sox fans you’ll ever meet.  Some publications he has been quoted in.

                Author of business & leadership book How Making a Sandwich Can Change Your World –  The Amazing Success of the PB&J Strategy – Available to Buy Now!

                Feel free to ask him a question directly at [email protected] including a complementary  valuation of your home.

                Posted in Open House Blog, Real Estate Tips on December 29, 2023 at 10:57 am.

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