Real Estate Market Planning

This time of year, EVERY YEAR, all of my clients, colleagues, friends, and family ask: "what is going to happen with real estate next year?!" So, here are my honest thoughts for 2024: Warning: I may not have a crystal ball, but I do have over 15 years of experience in selling luxury real estate with over $6B worth of transactions under my belt. However, it's still important to note that these are nothing more than educated guesses. 1. We are going to have even greater BIFURCATED MARKETS. Some industries are returning to pre-COVID patterns, while others are now permanently changed. As a result, there is significant interest in the repositioning of big box retail and commercial space. 2. Stemming from the increase in work from home, there will be more NATIONAL SEARCHES. People are now expanding their searches drastically. Rather than looking at comps in a building, neighborhood, or city, they're looking comps across multiple states! 3. SUBURBS are on the rise. This is driving up the demand for bigger homes with more amenities and privacy. Transaction volume is down by over 50% and listing volume is down by over 20%... yet median pricing is up by almost 5%. This creates more tax dollars for the suburbs, so if you're an investor, pay attention to what the municipalities are doing with that money (schools, restaurants, parks, etc.). 4. BRANDED RESIDENCES will be in strong demand. Since 2010, we've seen 40% growth in branded residences – and buyers have proven to be willing to pay a premium for them. 5. DOWNTOWNS built around professional workers will feel immense pressure. Don't get me wrong: Downtowns are not going to go away... but stemming from my 2nd and 3rd points, we are going to see even greater pressure on dense living spaces. 6. Investors are going to become BEARISH on real estate. I hesitate to talk about this because I'm in the real estate business... but with high interest rates, low supply, and low transaction volume, fewer investors are going to be looking to acquire property (in the near term!). 7. Prices are going to continue to... INCREASE! I know – this sounds crazy, right? The lack of inventory is going to continue, and it's going to keep prices high and growing. As the economy continues to do well and inventory stays locked, demand is going to continue to outpace supply. And if interest rates do come down... if you think prices are high now, just get ready. 8. Interest rates will actually STABILIZE. I don't think interest rates are going to plummet, but if unemployment stays low, the Fed will keep interest rates stable. – P.S. If you want to hear about each of these predictions in even MORE detail, check out my newest video on my second YouTube channel, More Ryan Serhant. – Every year can be the GREATEST year of your life. Remember, markets shouldn't dictate your outcomes. They should only dictate your strategy. Ready. Set. GO!

Interest rate shocks, post-pandemic behavioral shifts, and banking system stress have all converged on the US real estate market. We answer 6 of the most burning questions that are top of mind right now: Q1: What are our views on housing affordability? A: Housing affordability remains extremely stressed—and right now its significantly less expensive to rent vs. own in 48 of 50 of the largest markets. Q2: Will housing supply and demand balance out anytime soon? A: The housing market is likely to remain unbalanced for the foreseeable future in part due to the “lock-in effect”—80% of owners have a mortgage rate less than 5%. Q3: Will home prices head higher or lower in 2024? A: The supply-demand imbalance should keep a floor on home prices, and we see potential for modest price increases in 2024 at a national level. Q4: Is the worst yet to come for commercial real estate? A: Although distress is likely to increase, capital remaining available from banks and PE dry powder on the sidelines should help prevent a meltdown. Q5: Could office conversions be an answer to supply issues in big cities? A: While this looks like an ideal solution on the surface, it comes with its challenges—conversion potential is likely limited to 10–15% of existing office stock. Q6: Where could we see the best opportunities in real estate? A: We see the best CRE investment opportunities in residential rentals, industrial/warehouse, and distressed real estate debt over the next several years. Read our full report from Jonathan Woloshin, CFA for more.

Here's what I got wrong (and right!) about 2024. Thankfully, more right than wrong -- but there were two big surprises/misses. MISSES: 1) Total transactions will pick up moderately in 2024. What I said: “It will likely be a slog both for operations and to find deals … Still unclear how much volume we'll see, but seems likely more than 2023.” 2) Renter turnover will accelerate. What I said: My thinking was that renters had a ton of attractively priced options due to increased supply and vacancy, so turnover would continue to pick up as it did in 2023. HITS 1) Distress transactions will be a lot more buzz than reality. What I wrote: “Investors are increasingly resigned to seeing relatively little distress hit the market in 2024.” 2) SFR rent growth will NOT re-accelerate despite fewer move-outs to home purchase. What I said: "We need to stop assuming that a soft for-sale housing market equates to a booming ‘best of times’ rental market. When in history was that ever true? Never ..." 3) Multifamily values should bottom in 2024. What I said: “Values could be bottoming, and cap rates settling in the mid-5% range” on average. (Note that well-located Class A dropped back into the 4s.) 4) Cap rate spreads will widen between Class A and Class C. What I said: “I suspect well-located, new construction might not get discounted as much as buyers hope, while Class C/B- with value-add needs could be more challenged as cap rate spreads between to A to B to C normalize.” 5) Renewal rent growth will moderate as operators protect occupancy. What I said: “‘Heads on beds’ remains the strategy. Operators continue to give on price to maintain occupancy given the 50-year high in completions hitting in 2024. And diminished loss-to-lease means there’s less upside on renewals.” 6) Leasing demand will remain strong, and occupancy and rents won't crater What I said: “Fundamental demand for apartments is strong and should remain strong. Improved consumer confidence, a resilient job market plus wages outpacing rents all add up to robust demand … Not enough to keep pace with the 50-year high in new supply, but likely enough to keep occupancy levels fairly healthy and enough to avoid large rent cuts in most markets.” 7) Affordability will IMPROVE among market-rate renters signing leases. What I said: “Incomes are outpacing rents again, and likely will through at least 2024. That suggests median rent-to-income ratios (among market-rate lease signers) could soon drop back below the 23% mark.” 8) Expense growth will outpace revenue growth in 2024. What I said: “Expense growth will outpace revenue growth in a lot of markets in 2024, but the silver lining is that expense pressures are showing signs of mitigating.” 9) Apartment starts will plunge further. What I said: “New apartment construction starts plunged much more in 2023 than Census data suggests. And there's a mountain of evidence that starts could drop even further in 2024.”

99% of brokers answer the “How’s the market?” question with adjectives. 1% answer with data. That’s a huge difference—and it’s how you stand out in the CRE world. Too often, brokers fall into the trap of vague, feel-good terms: “The market’s strong!” or “It’s picking up!” But here’s the thing: clients deserve better. They deserve specifics, insights, and data. When someone asks me about the market, I share the real numbers: trends, vacancy rates, cap rate movements, or sales volume. Because understanding the story of the market requires real stats, not fluff. Here’s how to do it: 1️⃣ Know Your Metrics: Be prepared with the latest data—whether it’s about leasing trends, average price per square foot, or year-over-year sales activity. 2️⃣ Be Hyper-Local: What’s happening nationwide is important, but knowing the nuances of your specific market gives you the edge. 3️⃣ Give Context: Don’t just throw out numbers. Explain what they mean for landlords, tenants, or investors. 👉 Remember, credibility is built on the strength of your analysis. As Bob Knakal says, “The more informed you are, the more valuable you are.” So, next time you’re asked, “How’s the market?…leave the adjectives at the door and bring real insights to the table. Want to discuss the numbers in your market? Let’s connect. ———————————————— ➡️ I’m Logan Freeman, the #KansasCity #CRE Guy. 👉🏽 I can help you sell, buy, or invest in CRE in KC. 🫱🏾🫲🏼 Let’s talk, meet, and figure out how I or my team can help. #commercialrealestate #realestate #kansascity #brokerage

🚨 Interest Rates Held High: What It Means for Real Estate Investors! The Federal Reserve has decided to maintain its interest rates between 5.25% and 5.50%, delaying any potential rate cuts. Here’s what this means for commercial real estate investors: 1.    📈 High Borrowing Costs: With borrowing costs elevated, financing new acquisitions or refinancing existing loans becomes more expensive. => Our Strategy: We explore alternative financing options, such as seller carrybacks or private lenders, to reduce reliance on traditional loans. 2.    📉 Decreased Purchasing Power: Elevated mortgage rates reduce the pool of potential purchasers, affecting market dynamics and property values. => Our strategy: We focus on value-add or distressed assets only and prioritize secondary or tertiary markets with less exposure to interest rate fluctuations. 3.    💰 Critical Loan Terms: Securing favorable loan terms becomes increasingly important as interest rates remain high. This includes negotiating lower rates, longer terms, or more flexible repayment schedules. => Our strategy: We strengthen our relationships with lenders to negotiate better terms and maintain a strong credit profile to enhance our negotiating power. Adaptability is key in these economic times. How are you adjusting your real estate investment strategies in light of these high interest rates?

When it comes to understanding real estate cycles, few voices carry as much weight as Prof. Glenn Mueller, of Denver University. With over 40 years in the real estate industry and more than three decades of publishing the Market Cycle Monitor – used by institutional investors, developers, and academics alike – his data-driven framework is one of the most respected in commercial real estate. In our conversation, Prof. Mueller shared where each property type stands today, what signals matter most, and how CRE professionals should be thinking about the road ahead. -> Market Cycles: What’s Really Going On? Despite all the noise, most property types are still in the growth phase: * Industrial & Retail: At or near peak occupancy, retail in particular is benefiting from a decade of constrained supply. Nearly all new construction is pre-leased. * Hotels: Rebounding thanks to “revenge travel” and a resurgence in conferences. * Apartments: High demand, but oversupply in luxury urban product. Affordable and workforce housing remain structurally undersupplied. * Office: Deep in recession territory, with some institutional owners walking away from assets they no longer believe in. -> The Metrics That Matter Prof. Mueller’s cycle research is based not on pricing, but on physical fundamentals: * Occupancy drives rent. And rent drives income – still the most important part of your total return. * Employment growth is the leading indicator. Not GDP. Not interest rates. So far, job growth remains strong. -> Capital Flows & Pricing * Prices are down ~10%–15% since peak, but may have stabilized. Dry powder from institutions is waiting but may stay parked unless there’s more clarity. * Cap rates are up but lagging mortgage rates. Negative leverage is the norm unless you’re buying with cash. * Institutional defaults (like Brookfield in Denver) signal that some players no longer believe in a 5–10 year recovery timeline especially in office. -> Geopolitics, Tariffs, and the Big Picture * Tariffs + reshoring = long-term industrial upside. Short-term pain, but a potential boost for U.S.-based manufacturing and related real estate demand. * Foreign capital is still interested but currency swings and uncertainty are making investors more selective. Takeaways for CRE Sponsors 1. Track employment, not headlines – It’s the best predictor of demand. 2. Focus on income, not appreciation – In a higher-rate world, income drives returns. 3. Workforce housing and neighborhood retail are bright spots – These segments are undersupplied and resilient. 4. Dry powder is waiting, but only for clarity or distress – Don’t count on a quick return to 2021 valuations. *** For full analysis of this and other conversations, subscribe to my newsletter - link at the top of my profile on LinkedIn, here: Adam Gower Ph.D.

The latest data shows home prices in nearly every U.S. state are rising faster than real GDP (2.4%) and inflation (2.9%), with top growth in Connecticut, New Jersey, and Wyoming (8.3%). This divergence suggests that price appreciation is being driven more by supply constraints and capital flows than by underlying economic productivity. 🔍 Implications for Multifamily Investors & Developers: For-Rent Demand Will Stay Elevated: As for-sale housing becomes increasingly unaffordable, especially in states with double-digit appreciation, the demand for rental housing will remain strong. Rent growth potential increases in these markets, especially in high-barrier states in the Northeast. Watch for Supply-Constrained Markets: Wyoming’s appearance in the top 5—outside the typical coastal hotspots—signals that even tertiary markets can outperform when supply is tight. These are often overlooked but offer compelling cap rate compression and yield upside. Caution in Overheated States: Rapid price growth without wage or population growth (e.g. parts of the Northeast) may pose future correction risks. Investors should analyze long-term fundamentals like job migration, construction pipeline, and renter income growth. Combine this price data with rental vacancy rates and new construction permits to find where multifamily supply-demand imbalances are most acute. Now’s the time to double down on data-driven location selection. The next boom market may not be a major metro—but a supply-constrained secondary city. *The image is from Visual Capialist #LocationAnalytics #HousingPrices #Affordability #MarketStadium

I spoke with Bloomberg yesterday about the state of the housing market. Here are a few key takeaways: Easing Rate Lock-In Effect: Currently, 81 percent of mortgaged homes have a rate below 6 percent, a decrease from the peak of approximately 93 percent in 2022. Despite this improvement, the rate lock-in effect continues to constrain the market's full potential. Regional Market Variations: While the national housing market is trending towards a buyer's market, significant regional differences persist. Markets in Southwest Florida and parts of Arizona, Texas, and Colorado have weakened, whereas pockets in the Northeast and Midwest, including my hometown of Rochester, NY, remain seller's markets. Signs of Improvement: Although overall sales activity remains subdued, there are tentative signs of modest spring recovery. Pending home sales and purchase mortgage applications have seen slight increases compared to last year. This slow thaw is driven by factors such as wage growth outpacing house price appreciation, improving affordability, and increasing inventory. Life Events Driving Demand: Life events continue to drive housing demand. However, affordability challenges and macroeconomic uncertainties are keeping many potential buyers on the sidelines. Nonetheless, the slight uptick in activity offers cautious optimism for the remainder of the year, especially if interest rates moderate (though we're not predicting significant mortgage rate declines this year). Check out the full interview below! https://lnkd.in/eUSiKkVJ

Where do the world’s wealthiest families turn when the markets get shaky? Not to speculation. Not to headlines. They turn to something they can see, control, and pass on. They turn to real estate. As volatility reshapes investing, Family Offices are adjusting their strategies. Real estate is no longer just an allocation choice. It has become a foundational element. Families with significant wealth are grounding portfolios in hard assets that offer return potential and protection. According to the 2025 Knight Frank Wealth Report, 44 percent of Family Offices worldwide intend to increase their exposure to commercial real estate over the next 18 months (Knight Frank, 2025). CRE Daily confirms that demand is growing across residential and industrial sectors as families position themselves ahead of an anticipated rebound (CRE Daily, 2025). This shift reflects more than short-term positioning. Research from BNY Mellon and BlackRock shows a consistent trend. Family Offices managing under $1 billion are allocating more to real estate. Those with assets over $1 billion are doing so at an even faster rate. They are prioritizing stability, tax benefits, and ownership over market speculation. In India and other growing economies, ultra-wealthy families are acquiring landmark properties. These assets carry more than financial value. They hold cultural weight and represent permanence. These purchases are not just investments. They are statements of identity and heritage (Economic Times, 2025). At the same time, many Family Offices are rethinking their exposure to public equities. As noted by Barron’s, capital is steadily moving into private markets, including real estate and private equity. This transition reflects a preference for control, privacy, and alignment with long-term values (Barron’s, 2025). In New York, this philosophy is turning into action. The Wall Street Journal reported that converting underused office buildings into residential space is now financially viable. With vacancy rates near 16 percent and updated tax incentives, families are moving quickly to seize these opportunities (Wall Street Journal, 2025). Their ability to operate quietly and decisively gives them an advantage over institutions. Real estate fits the priorities of families who think generationally. It offers consistent income, direct influence, and the ability to shape outcomes over time. Unlike stocks, property can reflect a family's vision and purpose. These investments are not driven by hype or momentum. They are rooted in clear thinking, patient capital, and planning. This marks the rise of a different kind of real estate investor. One who is not chasing trends or reacting to headlines. One who is investing with clarity, conviction, and continuity. In this environment, Family Offices are not following a movement. They are building legacies. https://lnkd.in/gZYHGi_T

Want to determine a property's fair market value? Let me help you with that. ⤵️ Determining the fair market value of a property involves careful analysis of multiple factors, not just one or two. 1️⃣ Comparative Market Analysis (CMA) Think of CMA as looking at your property through the lens of the market - what have buyers recently paid for similar homes? This analysis considers properties sold within the last few months, comparing crucial elements like square footage, number of bedrooms and bathrooms, and location quality. 2️⃣ Property disclosures These documents come in two main forms: inspection reports and seller's disclosures. 👉 Inspection reports serve as a comprehensive health check of the property, examining everything from the foundation to the roof. Think critical systems like plumbing, electrical, and HVAC, providing potential buyers with a clear picture of the property's current state and any necessary repairs or upgrades. 👉 Seller's disclosures complement inspection reports by revealing information that only someone who has lived in the property would know. This might include historical issues, recent repairs, or specific quirks of the property that could affect its value. 3️⃣ Market conditions Unlike many other regions, the local real estate market in the Bay area is intimately tied to the technology sector. When the stock market performs well, many tech employees can leverage their stock portfolios for down payments, leading to increased competition and higher property values. This creates a fascinating dynamic where property values can fluctuate based on stock market performance more than traditional real estate market factors. 💡 Interestingly, the Bay Area market tends to remain somewhat insulated from broader economic factors. While higher interest rates and tech industry layoffs can create some market ripples, their impact is often less significant than in other regions. 4️⃣ Curb appeal A property's exterior condition, landscaping, and overall presentation can significantly impact its perceived value. This first impression often sets buyer expectations and can influence their willingness to pay a premium. 5️⃣ History of the property This means checking county records to verify important details like: - The accuracy of the stated square footage - The legitimacy of bedroom and bathroom counts - The property's zoning classification - Previously pulled permits - The actual lot size The most accurate property valuations come from carefully weighing all these factors together. No single element tells the complete story. ✨ This comprehensive approach helps ensure that both buyers and sellers can make informed decisions based on reliable, well-researched information. ➡️ Ready to discover your property's true market value? Send me a message for a detailed valuation that goes beyond basic comps. 📩 #realestate #realtor #home #bayarea #valuation