From ecosystem conservation to “new” darker neutrals in exterior paint, we look at the trends set to take hold in the industry this year.
Three Key Takeaways
- Advise buyers that nobody should copy trends for their popularity since they change over time; a better approach is to seek joy.
- Aging boomers have more options to choose among, from staying put with features that aid safety to going to a facility with specialized care.
- Landscapes that conserve nature and shelter pollinators and wildlife are designed for private backyards and shared communities.
Staying abreast of what’s new and innovative in design and real estate is important, not to be trendy but to learn about innovative materials, systems and products to live more sustainably and benefit the planet. Also, new uses for rooms can maximize square footage and our surroundings to add joy to our lives. The following 10 trends are worth considering since they can positively influence whether homeowners reside in single- or multifamily housing.
Homeowners Are More Apt to Stay Put
With interest rates for a 30-year fixed mortgage still high, home prices holding steady and inventory still low, many homeowners plan to stay put, optimizing or expanding their existing square footage. Laurel Vernazza, Home Design Expert at The Plan Collection— Scarsdale, N.Y.-based company that sells pre-drawn plans—says that for those with no plans to move, the wish list includes:
- Sustainable features
- Accessory dwelling units as zoning laws change
- Pickleball courts
- Remodeled basements with saunas
- Media centers and game rooms
- Home offices as working from home continues
- Outdoor space, not just at ground level but above as well
- AI-driven technology to make homes easier to use and more energy-efficient
Why now? Homeowners want to be active but decrease maintenance and energy consumption. They favor sustainable materials sourced locally to pare carbon footprints and support local businesses, which is especially true for millennials and Generation Z. Many materials reflect better waterproofing, and garages may have room for battery back-up systems if power goes out, says architect Jonathan Boriack, AIA, LEED AP, principal with KTGY in Oakland, Calif.
Specialized Needs for an Aging Population
Architectural firms like The Architectural Team (TAT) outside Boston are designing facilities for specialized needs, such as The Cordwainer, which will have private and double rooms and a host of amenities including a two-story atrium, performance center, game room to stimulate the brain, and memory care garden. The bedrooms will be divided between two neighborhoods so residents can safely wander, says TAT architect Anthony Vivirito. Also critical is light to help with circadian rhythms and mood. “Biophilic elements and the focus on unique spaces for invigorating activities and entertainment required stepping away from traditional practices,” says Tamilyn Liesenfeld, president and CEO at Anthemion Senior Lifestyles, which owns and operates The Cordwainer in Norwell, Mass.
Why now? With aging boomers numbering 76.4 million, more attention is paid to their housing needs when they can’t stay at home, which includes many of the estimated 6.7 million who have Alzheimer’s disease.
Smaller Single-Family Homes and More Townhomes
Variety is the spice of homebuilding. Currently, homes are shrinking in size(link is external), with the median for single-family houses at 2,261 square feet and the mean square footage of new single-family homes down to 2,469, according to the National Association of Home Builders. One of the most popular styles is the ranch house. The style also offers the flexibility to be opened up indoors and to the outdoors, according to Vernazza. Attached townhomes and stacked flats have gained popularity due to the need for smaller square footage in dense sites, says Boriack.
Why now? The main reasons(link is external) for smaller single-family homes are high mortgage rates and lifestyle changes that favor fewer bedrooms. As far as townhomes and stacked flats are concerened, the economics of for-sale property works with current market finances more for developers than rentals do. Land shortages make attached and stacked units smart choices.
Bigger Apartments
At the same time that single-family homes are shrinking, apartments are increasing from an average of 870 square feet before the pandemic to closer to 1,000 square feet, says architect Sean M. Stadler, FAIA, LEED AP, a managing principal with WDG Architecture’s Washington, D.C. office.
Why now? Many renters want more space to work from home and favor more bedrooms, if they can afford, Stadler says.
Homeowners Want Sustainable Energy Use
Sustainability isn’t going anywhere. In fact, it’s growing in popularity, and received a boost in January 2023, when the Department of Energy(link is external) announced federally backed incentives to help builders make DOE-certified Zero Energy Ready Homes their standard. An example of a builder focused on both energy efficiency and lower construction waste is Netze Homes, based outside Dallas, which uses steel that it recycles from cars. It claims its houses are 20 times stronger than those built from wood. Since the frame is built in a factory to exacting specifications, the homes are tighter and the resulting lower air exchange makes them more efficient.
Why now? Sustainable homes do a better job of withstanding extreme weather, are fire-resistant, and curb termite damage, wood rot and mold. Energy-efficient homes help residents save up to 35% on their electric bills and cut 40% of waste since the frame is formed in a factory. These homes have lowered carbon emissions by 50% against the industry average, proponents say.
Luxury Spec Building Demand is on the Rise
The demand for spec luxury houses and townhomes continues, particularly in South Florida, according to J.C. de Ona, president of the southeast division of Centennial Bank. Waterfront sites are particularly desirable. “Some demand may have softened so that there now may be 10 to 20 buyers rather than 100 at a house, but it’s still strong and prices remain up,” he says. Favored features include a modern design with flat roofs, wood detailing, a pool, an open plan and beautiful kitchens, he says.
Why now? After slowing from 2012 to 2014, spec building has picked up, due to an uptick in migration. Jose R. Boschetti Jr., managing partner of The Boschetti Group in South Miami, Fla., also sees demand from buyers wanting a minimalistic design and maintenance-free living with artificial turf, porcelain floors, smart features and pools in close proximity to the house to maximize indoor/outdoor connection.
An Abundance of Multifamily Amenities in Small Buildings
People are still looking for features in smaller buildings, says architect Joshua Zinder of Joshua Zinder Architecture + Design in Princeton, N.J. His four-story, six-unit, mixed-income building, Nelson Glass House, reflects the trend of “amenity creep” that has “percolated down to smaller buildings,” he says. Units have terraces, shared parking, bike storage, “Zoom rooms” for online meetings and a ground-level coffee shop. “Having just a good location doesn’t cut it anymore,” he says. Other popular amenities, he says, are a grocery store, pet trail, package center, and lounge and lobby for interaction—sometimes with classes—and electric vehicle charging stations.
Some buildings use amenities like EV stations to add revenue, according to Swtch Energy, an EV charging solutions provider that works with multi-tenant properties. Many buildings add programming through a property management company like FirstService Residential, says Katie Ward, the company’s regional president for Texas. The trend has evolved that property management doesn’t just plan space but creates a culture to tailor connections to needs through events, she says.
Why now? Amenities allow smaller buildings to compete with bigger ones, retain residents and attract newcomers, says Stadler. One challenge is having amenities that are appealing when a building opens, since the timeline for delivery may be five years.
A Continued Focus on the Kitchen
The kitchen remains the heart of the house with old trends in force along with new ones gaining traction, says designer Mick De Giulio of de Giulio Kitchen Design outside Chicago. Induction cooktops continue to increase in number, in part because new homebuilding regulations in certain municipalities require phasing out gas ranges for safety and sustainability, according to The Plan Collection.
De Giulio says an organized, walk-in pantry; more light through big windows or LEDs in warmer colors; artisan and hand-crafted features such as hand-scraped wenge wood; and a mix of materials like German silver, stainless with special finishes, and bronze are popular, as well as the island.
Why now? In most cases, the kitchen is one of the most used, most seen rooms in a home. People are still eager to congregate in the kitchen, and within the space, certain trends stand out. A kitchen redo makes sense since, if it’s done well, it can last 30 years, though appliances may need to be replaced along the way, De Giulio says.
Natural, Native Landscaping as a Priority
Whether in communities or private backyards, homeowners want to conserve ecosystems. In smaller communities, even in urban settings, variations of the conservation community or “agrihood,” like Pendergrast Farm in Atlanta, are emerging. The 20 energy-efficient, solar panel–ready homes, wired for EV charging stations, will have a Home Energy Rating System rating of 50 that will use 50 percent less energy than comparable new homes. Seventy percent of its land will be preserved for woods and a working farm.
In private backyards, “rewilding” uses native plants to create habitat. Hillary Peters with Mariani Landscape in Lake Bluff, Ill., says this trend is popular among clients who are interested in restoring ecosystems and biodiversity. By bringing native plants to a landscape, homeowners can create a space that meets needs and supports wildlife.
Why now? Such communities bring together features that reflect homeowner interest in conservation, and the scarcity of land makes this viable. Likewise, homeowners are aware of their impact on their environment and the need to protect wildlife. Any little bit helps, Peters says—installing a birdhouse or water feature or using native plants and grasses makes a difference.. She advises against cultivars, which do not always serve pollinators.
“New” Neutrals for the Exterior
Neutral colors are more popular, says residential and commercial color consultant Amy Wax in Montclair, N.J. “They are a safe choice, offer the opportunity to decorate a home with more emphasis on landscaping, give homeowners the chance to market their home without having to repaint and are not the subdued hues of the past,” she says. Many neutrals are even darker, such as midnight blue, charcoal gray and true black for drama.
Why now? Dark exterior accents express confidence with a bold street presence. Adding a periwinkle blue front door or taxicab yellow or hot pink accent is fair game. Durability should be weighed since darker colors may fade, so it’s best to apply paint with a subtle sheen to protect surfaces.
When Will Home Prices Be Affordable Again?
Home buyers have their fingers crossed that 2024 will be the year where home prices regain some normalcy. One promising sign entering the new year: mortgage rates, which remained stubbornly high throughout 2023, have steadily declined over the last couple of months.
Following eight consecutive weeks of declines, the average 30-year fixed rate rose for the second straight week by a modest four basis points to 6.66%—more than one percentage point lower than the 7.79% peak of 2023—for the week ending January 11, according to Freddie Mac. A basis point is one-hundredth of one percentage point.
Yet, despite this easing, mortgage rates remain elevated and home prices are stubbornly high as historically low housing stock continues to put homeownership out of reach for many—most notably first-time buyers—who remain more pessimistic than ever about being able to afford a home.
Housing Market Forecast for 2024
2023 was a demoralizing year for many aspiring home buyers.
Mortgage rates surged—hitting a high of 7.79% in October—and median home prices in the third quarter were north of $400,000. Moreover, in July, average monthly payments hit their highest level ever at $2,306, according to Intercontinental Exchange, a financial technology and data services provider.
However, 2024 may be a better year to purchase a home—at least for some. While home prices will likely remain elevated—and even increase in some markets—industry experts expect prices in certain areas of the country to soften.
Economists are also optimistic that the Federal Reserve is done with its rate-hiking campaign to lower inflation after policymakers kept the federal funds rate unchanged for a third straight meeting on December 13. The federal funds rate is the benchmark interest rate financial institutions charge each other for overnight loans; it tends to indirectly influence mortgage rates.
Even so, affordability challenges will continue in 2024. Pent-up demand and low inventory will generally bolster prices, and elevated mortgage rates will remain until the Fed implements cuts to the federal funds rate.
Mark Fleming, chief economist at First American Financial Corporation, predicts a “flat stretch” ahead for the housing market. “If the 2020-2021 housing market was too hot, then the 2023 market was probably too cold, but 2024 won’t yet be just right,” Fleming said in his 2024 forecast.
When Will the Housing Market Recover?
For a housing recovery to occur, several conditions must unfold.
“For the best possible outcome, we’d first need to see inventories of homes for sale turn considerably higher,” says Keith Gumbinger, vice president of mortgage website HSH.com. “This additional inventory, in turn, would ease the upward pressure on home prices, leveling them off or perhaps helping them to settle back somewhat from peak or near-peak levels.”
And, of course, interest rates would need to cool off.
But Gumbinger says don’t hope they cool too quickly. Rapidly falling rates could create a surge of demand that wipes away any inventory gains, causing home prices to rebound.
“Better that rate reductions happen at a metered pace, incrementally improving buyer opportunities over a stretch of time, rather than all at once,” Gumbinger says.
He adds that mortgage rates returning to a more “normal” upper 4% to lower 5% range would also help the housing market, over time, return to 2014-2019 levels. Yet, Gumbinger predicts it could be a while before we return to those rates.
Will Mortgage Originations Remain Low Through 2024?
Eye-popping mortgage rates in the last few years have led to plummeting mortgage applications. The good news is that rates have begun receding in recent weeks.
While application activity remains tepid, the Mortgage Bankers Association (MBA) sees this as the bottom, predicting total mortgage origination volume will increase from an anticipated $1.64 trillion in 2023 to $1.95 trillion next year amid rates drifting down to near 6% by the end of 2024.
Fannie Mae also expects mortgage activity will trend up, with single-family mortgage originations undergoing a slow but meaningful recovery in 2024, according to a recent report.
Housing Inventory Forecast for 2024
With many homeowners “locked in” at low interest rates or unwilling to sell due to high home prices, demand continues to outpace housing supply—and likely will for a while.
“I don’t expect to see a meaningful increase in the supply of existing homes for sale until mortgage rates are back down in the low 5% range, so probably not in 2024,” says Rick Sharga, founder and CEO of CJ Patrick Company, a market intelligence and business advisory firm.
Housing stock remains near historic lows—especially entry-level supply—which has propped up demand and sustained ultra-high home prices.
Nevertheless, there are some hopeful signs.
For one, home-builder outlook, which had been on a downslide, is trending back up amid declining mortgage rates and better building conditions.
The most recent National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which tracks builder sentiment, rose from 34 to 37 in December. A reading of 50 or above means more builders see good conditions ahead for new construction.
At the same time, new single-family building permits managed to tick up slightly in November—the 10th consecutive monthly increase—according to the latest data from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Existing-Home Sales Rebound Slightly: Is a Home-Buying Upswing in Play for 2024?
Existing-home sales underwent a slight, surprising thaw in November, despite still-high mortgage rates, rising home prices and low housing inventory.
Following a 4.1% nosedive in October, existing-home sales inched up by 0.8% in November, ending five straight months of declines, according to the latest monthly data reported by the National Association of Realtors (NAR). Year-over-year transactions were down 7.3%, the smallest annual decline since April 2022, according to Realtor.com.
These contract closings likely occurred during the two months before November when the average 30-year fixed mortgage rate ascended to heights not seen in over two decades, suggesting impatient home buyers may be adjusting to higher rates.
Though sales activity remains weak, experts predict this uptick could signify a burgeoning turnaround in 2024.
“Falling rates will bring both more buyers and more sellers into the housing market,” said Dr. Lisa Sturtevant, chief economist at BrightMLS, in an emailed statement. BrightMLS forecasts existing home sales to reach 4.6 million in 2024—up from an expected 4.1 million in 2023—and inventory to increase by approximately 8% by the end of the year.
Meanwhile, chronically low resale inventory receded 1.7%, leaving existing home stock at a scant 3.5-month supply at the current sales pace. Many experts say a balanced housing market has four to six months of inventory.
Demoralized Home Buyers See Little Affordability Relief in 2024
If you want to buy a home today, expect to see prices 40% higher compared to February 2020, according to Zillow. In the third quarter of 2023 alone, NAR reports that home prices grew in more than 80% of U.S. metro areas year over year.
Combine elevated home prices with mortgage rates in the high-6% range amid persistent inflation, and it’s no wonder that the latest Fannie Mae Home Purchase Sentiment Index (HPSI) reported 86% of consumers say they need to put home-buying plans on hold, a new survey record.
“Over the past year, the HPSI has plateaued at a low level, evidence of persistent consumer pessimism regarding the state of the housing market,” said Doug Duncan, senior vice president and chief economist at Fannie Mae, in a press statement. “Even if mortgage rates decline over the next year, which we currently expect, it’s unlikely to meaningfully affect affordability.”
Other indices also indicate that home affordability, while likely to improve to some degree over the next year, may still be out of reach for many in 2024.
First-time buyers hoping to land a home at a lower price point are likely having the hardest time as affordability conditions continue to deteriorate, according to NAR.
The trade association’s First-Time Homebuyer Affordability Index preliminary third-quarter reading came in at 61.9, compared to 65.4 in the second quarter. A reading of 100 indicates that a family earning a median income earns exactly enough to qualify for a mortgage and afford a typical home.
Moreover, the median monthly housing payment hit an all-time high of $2,715 in 2023, up 12.6% from 2022, according to a Redfin report, which labeled 2023 the least affordable year on record for home buyers. Lenders generally advise monthly mortgage payments not to exceed 30% of pre-tax income.
Will the Housing Market Crash in 2024?
Despite some areas seeing price declines, the likelihood of a housing market crash—a rapid drop in unsustainably high home prices due to waning demand—remains low. Experts point out that today’s homeowners stand on much more secure footing than those coming out of the 2008 financial crisis, with many borrowers having positive home equity.
Moreover, Orphe Divounguy, senior macroeconomist at Zillow Home Loans, says competition for houses has remained surprisingly resilient despite mortgage rates reaching highs not seen in more than two decades.
“In 2024, I expect we’ll see home appreciation take a step back but not plummet,” Divounguy says, especially as inventory is still constrained. Most experts say supply will remain tight for the foreseeable future.
Divounguy also notes that several factors, including Millennials entering their prime home-buying years, wage growth and financial wealth are tailwinds that will sustain housing demand in 2024.
Even so, with fewer homes selling, Dan Hnatkovskyy, co-founder and CEO of NewHomesMate, a marketplace for new construction homes, sees a price collapse within the realm of possibility, especially in markets where real estate investors scooped up numerous properties.
“If something pushes that over the edge, the consequences could be severe,” said Hnatkovskyy, in an emailed statement.
Will Foreclosures Increase in 2024?
Despite foreclosure activity trending up nationally, experts generally don’t expect to see a wave of foreclosures in 2024.
“Foreclosure activity is still only at about 60% of pre-pandemic levels as we prepare to exit 2023, and isn’t likely to be back to 2019 numbers until sometime in mid-to-late 2024,” says Sharga.
The biggest reasons for this, Sharga explains, are the strength of the economy—currently we’re seeing low employment and steady wage growth—along with excellent loan quality and expanded financial relief offerings from mortgage servicers.
Massive growth over the past few years in homeowner equity has helped reduce foreclosures as well. Sharga says that some 80% of today’s homeowners have more than 20% equity in their property. So, while there may be more foreclosure starts in 2024, foreclosure auctions and lender repossessions should remain below 2019 levels.
Even so, foreclosures increased in 2023, raising concerns for some in the industry.
“Foreclosure filings continue to paint a concerning picture,” said Rob Barber, CEO of property data provider Attom, in a report. “As we look ahead to 2024, we anticipate a potential uptick in foreclosure activity as various economic factors evolve and market dynamics shift.”
In November, foreclosure filings were up 5% from last year, according to Attom. At the same time, foreclosure completions dropped 32% from a year ago, which Barber attributes to seasonal factors.
Should I Wait Until 2024 To Buy a Home?
Buying a house—in any market—is a highly personal decision. Because homes represent the largest single purchase most people will make in their lifetime, it’s crucial to be in a solid financial position before diving in.
Use a mortgage calculator to estimate your monthly housing costs based on your down. But if you’re trying to predict what might happen next year, experts say this is probably not the best home-buying strategy.
“The housing market—like so many other markets—is almost impossible to time,“ says Orphe Divounguy, senior macroeconomist at Zillow Home Loans. “The best time for prospective buyers is when they find a home that they like, that meets their family’s current and foreseeable needs and that they can afford.”
Gumbinger agrees that it’s hard to tell would-be homeowners to wait for better conditions.
“More often it seems the case that home prices generally keep rising, so the goalposts for amassing a down payment keep moving, and there’s no guarantee that tomorrow’s conditions will be all that much better in the aggregate than today’s.”
Divounguy says “getting on the housing ladder” is worthwhile to begin building equity and net worth.
Pro Tips for Buying in Today’s Housing Market
Frick offers this expert advice to aspiring buyers:
Pro Tips for Selling in Today’s Housing Market
Divounguy has this expert advice for sellers: