2024 was a memorable year in real estate. Factors such as higher interest rates, institutional investment buyers, soaring rents, and a shortage of inventory led to a challenging market. It was a year of record highs and lows. Real estate consumers were richer and older than ever before which
makes for tough competition for younger buyers and those in the middle class. These two groups of consumers were consistently pushed out of the real estate market last year. The median age of first time homebuyers was 38 years old in 2024, bumped up from 32 just a few years ago. The median age of homebuyers was 56 years old; in 2023 it was 49. That is a significant jump in one year and the highest median home buyer age that has been seen in the real estate market.
These older, richer consumers contributed to a record number of cash buyers in the market. Cash transactions accounted for 26%⬆️of real estate transactions in 2024. While first time homebuyers transactions ended up being only 24%⬇️of transactions last year, a record low. Another all-time record high was the number of multigenerational home purchases which landed at 17%⬆️.
On top of that, 2024 was a year of all-time low inventory. Many potential sellers who would normally be looking to make a move, were reluctant to sell after refinancing their mortgages during the record low interest rates in 2020 and 2021. The jolt of going from 2.5% interest to 8% kept many people from selling their homes, and consequently, from purchasing their next home. It also kept potential first time home buyers renting, waiting for interest rates to decline. Meanwhile, rents continued to rise and inflation made it hard for these potential buyers to set money aside in preparation for a down payment when they were ready to purchase.
In 2023 there were 4.1 million home sales transactions, which was the lowest number of sales in close to 30 years. Final 2024 transaction numbers are not in yet, but the results are projected to be very close to 2023. The number of transactions in the next couple of years is forecasted to be around 5-6 million transactions. As more builders are getting new homes on the market (trend that was seen in the last half of 2024), new home sales are expected to grow in 2025. However, the biggest influx to the market is forecasted to be people selling due life circumstances. Family growth, new jobs, retirement, death, or divorce will eventually contribute to people moving, forcing restrained sellers to release into the market. This factor combined with interest rates projected to hover around 6%, lead to the belief that the market is poised to be fluid and steady.
Experts forecast these changes could bring new opportunities for both buyers and sellers. For sellers, the market shift in 2025 could be the moment they’ve been waiting for. Life circumstances will likely push many homeowners to sell, creating a ripple effect of increased activity. For buyers, this activity could be the opportunity they were waiting for last year. With more inventory—including newly built homes—and stabilized transaction numbers, buyers may find less competition and more favorable options.
Here’s to a new year and new opportunities!
Sources: Brian Buffini’s Bold Predictions 2024 Real Estate Market Outlook, featuring Dr. Lawrence Yun-NAR Chief Economist
