The residential real estate market in 2024 continues to evolve rapidly, shaped by a blend of economic, demographic, and technological factors. As a business operations leader, marketing professional, or someone responsible for customer engagement in the real estate sector, understanding these trends, challenges, and opportunities is vital for strategic planning and decision-making.
"2024 will be the year of getting back to the basics in real estate marketing" - Jori Storm
Emerging trends & observations
- PropTech is innovating key parts of RRE: PropTech, aka property technology, continues to grow as a strategy for boosting applications and operational efficiencies. From virtual reality (VR) tours to AI-driven property management systems, technology is reshaping how properties are marketed, sold, and managed.
- Technology is slow to adopt: Despite growth in PropTech, technological adoption isn't as fast as a flick of a switch – many businesses are large ships, turning slowly and deliberately. It will take time, but the demand will be strong and consistent as operators look to do double duty on reducing costs while upping satisfaction.
- Sustainable living: Eco-friendly homes are no longer a niche market. Buyers are increasingly seeking energy-efficient, sustainable properties, driven by environmental concerns and long-term cost savings.
- Urban migration reversal: "Flip flop flip flop flip flop" is a famous quote by Michael Scott. Remote workers continue to leave the city for fresh air. Remote workers also continue to move back to the city for connection. The only reliable information we have is that offices are still empty, reflecting that 30% of tenants are WFH or hybrid and seek related amenities.
- Changing demographics: Millennials and Gen Z are becoming dominant forces in the housing market. Their preferences for affordability, flexibility, and technology-rich environments are influencing housing designs and features.
- Market fluctuations: The only constant is change. Economic uncertainties, fluctuating interest rates, and global events continue to impact market stability. Savvy investors and homeowners are on the lookout for market shifts to capitalize on investment opportunities, while the rest of the experts sit by and await to see which commercial firms will start defaulting on loans. That office crisis? JP Morgan reports that it could trigger a pricing tumble of up to 40% in the commercial real estate sector as buildings make concessions for new leases.
Challenges facing the residential real estate sector
- Affordability crisis: Despite demand, there's a significant affordability gap, especially in major urban centers. Rising property prices and stagnant wage growth pose challenges for tenants in high rent areas. "Alternatives to security deposits" will grow just like alternative financing to mortgage down payments grows.
- Technological adaptation: While technology offers numerous advantages, it also presents challenges in terms of cost, implementation, and training, particularly for traditional real estate firms.
- Inflation pressures and the impact on tenants and managers. Despite reports that food costs rose at a rate below inflation in November 2023, overall costs still rose roughly 5.8% across the board. When food prices go up, everyone tightens their belts.
Thanks to Apartmentalize's 2023 survey of members, we know that saving on operations, signing new leases, and renewing leases are the core challenges (and focus) for residential real estate managers.
Opportunities in the 2024 landscape
Perks for the people
We believe that resident perks will become the norm, as property managers look to improve the resident experience and everyone looks to save money on every day needs in 2024. "I would move if I didn't actually have to move myself," says David Jara, real estate perks experts at Paylode. "With a move-in bundle, tenants can budget for their move at a time when scraping together cash for 1st, last, security, and movers on top of that is just too daunting financially."
Collaborative ventures
Partnerships with tech companies, sustainability experts, and local governments can lead to innovative projects and solutions that address market demands and regulatory challenges.
Personalization
Tenants are more than just an address. If you want them to stick around for the long term, you'll need to show them they are what makes your community great. Listen to their feedback, improve the experience across all categories (leasing, moving, living/WFH, and paying rent), and provide a ton of value for the price.
"2024 will be the year of getting back to the basics in real estate marketing," says Jori Storm, multifamily marketing strategist. She tells Paylode, "As apartment supply rises to some of the highest levels in decades, our prospect pool has the most options. Take this as an opportunity to tighten up customer service, pay attention to online reviews, make every tour count, tailor your follow up communication and use customized content."
The residential real estate market in 2024 presents a dynamic mix of challenges and opportunities. Stay informed and adaptable, so you can navigate these complexities to find success. Remember, in real estate, as in most sectors, those who anticipate and adapt to changes are the ones who thrive.
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