Apollo's 2024 ten key findings for US real estate

2024 Real Estate findings from Apollo
by Zain Jaffer

I was reading Apollo Research’s top findings for 2024 for US real estate. They had ten key takeaways which are worth knowing [from https://www.apolloacademy.com/us-housing-outlook-11/]:

First is that US home sizes are getting smaller, down by 12% since 2016. This is not a surprise considering that prices for construction items have risen due to inflation.

The second is that the median age of the typical home buyer is now 49 years old from 31 in 1981. Again no surprise since paychecks have not risen as much as prices. Home ownership is fast becoming elusive for many young people.

The third related finding is that Apollo also predicts a home price rise of 10.8% this 2025. Again due to inflation.

Fourth, they found that 40% of US homes do not have a mortgage. If you have the cash, you can probably get good discounts in certain markets, since new buyers are somewhat still wary of high interest rate mortgages. So people who have the money will prefer to up their equity in the house to lessen the high interest rate loan component if they can.

Fifth which comes at no surprise too, the average number of homes sold by real estate agents is now 21 from 54 in 2004. Twenty years ago, real estate agents sold as much houses as they do today. Clearly there are less buyers and sellers now leading to an almost static market in many places.

Six, the typical household equity is now around 73% of home values. Again, people are trying to lessen the high interest rate loan mortgage component if they can.

Seven, 36% of Americans say they would rent if they were to move. Given the uncertainty of the job markets, the desire to wait for lower rate mortgages, and the static nature of the market gives many pause before they ink a deal.

Eight, which contributes to the static market, is that more than half of all outstanding mortgages have an interest rate below 4%. Potential sellers, unless they really need to, are hesitant to sell because they know they will also be taking on higher rate mortgages. So they prefer to sit it out and wait.

Ninth, 95% of outstanding mortgages are 30 year fixed rate. People are worried about suddenly getting adjusted to a higher rate, given the Fed rate hikes of the past two years. Even if an adjustable rate could work in their favor, but they likely view a higher rate as a more probable possibility.

Lastly, 63% of all outstanding mortgages were issued after 2018. Those who got sub 3% thirty year fixed rate mortgages in the later part of 2020 are content enough to sit pretty instead of taking on a new mortgage [https://fred.stlouisfed.org/series/MORTGAGE30US].

Real estate is really determined by specific locality supply and demand situations, and all of these figures are national averages which may or may not really reflect what you are seeing for your particular location.

However knowing these snapshots of the industry helps us to plan better and know more or less the situation on the ground.

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