Featuring the perspectives of local brokerage executives:
Colleen Barry
CEO, Gibson Sotheby’s International Realty
Pauline Bennett
Regional President, Northeast, Coldwell Banker Realty
James D’Amico III
CEO/President, CENTURY 21 North East
Anthony Lamacchia
CEO, Lamacchia Companies Inc.
Nick Warren
Founder and CEO, Berkshire Hathaway HomeServices Warren Residential
What do you expect for the overall housing market for 2024? Up, down or stable? Why?
Colleen Barry: In 2023, buyer demand remained high, while some sellers held off on plans to sell, not wanting to trade their 3% mortgage interest rate for a 7-8% rate. In 2024, we expect that prices will continue to grow moderately and that inventory will begin to increase. If interest rates come down even 50 basis points, we will see more buyers and sellers coming into the market.
Pauline Bennett: Real estate industry experts (NAR) project that the Federal Reserve will cut interest rates in 2024, bringing the fixed rate for a 30-year mortgage down into the 6% range by the spring. This is expected to encourage more homebuyers and sellers to enter the market. Based on current trends, we don’t expect major increases in housing inventory or enormous price adjustments in the immediate future, but that is a step in the right direction.
As we entered the final quarter of 2023, the Massachusetts Association of Realtors noted an increase in home inspections and subsequent renegotiations across the state, indicating that buyers are arriving at the closing table with more negotiating power. This is an encouraging trend toward balance in the housing market as we approach the new year.
Nick Warren: The 2024 housing market is expected to mirror 2023’s trends, characterized by reduced sales volume and generally stable prices. Here’s why:
High interest rates. Forecasts suggest minimal fluctuation in interest rates for 2024. Any decrease is unlikely to be significant enough to address the inventory challenges. Even if rates drop in response to a recession, the economic downturn could deter potential buyers, limiting any positive impact on the market.
Low inventory. Many homeowners, especially those who bought in early 2022 or before, benefit from low-interest rates (high twos to low threes). This comfort makes them reluctant to sell, contributing to persistently low inventory levels. Most sellers in the market today, and most likely in 2024, are those who must due to necessity, such as job relocations or significant life events.
In summary, while the market may see some shifts, the interplay of these factors suggests continuing current trends into 2024.
Anthony Lamacchia: I expect more of the same, a very similar year to 2023, but the first couple of months will be even slower than the horribly slow first couple of months than 2022. Reason being, we are going into 2024 with less inventory than we did in 2023, which is mind-blowing to think about.
James D’Amico III: I expect the overall housing market to loosen up a bit in 2024. Homeowners can truly only wait as long as their needs can wait. Growing families, downsizing, investing, retiring and relocating are factors that always push the market, and the past year it seems many have delayed their moves due to having such low interest rates on their homes. At some point, that will change.
Do you think any segments of the residential market will see growth in 2024? (new construction, rural, luxury, etc.)
Bennett: In 2023, Boston attained an approximate 3.39-month inventory of condos, which is an improvement over 2.51 months in both 2021 and 2022, and even 3.34 months pre-pandemic in 2019. Across all of Massachusetts, the approximate supply of single-family home inventory was 1.51 months, the highest since 2.72 months in 2019. We are optimistic that this is an upward trend, with six months of housing inventory considered a normal housing market.
Warren: In 2024, I anticipate a modest growth in the new construction segment of the residential market. This optimism stems from developers recognizing the ongoing inventory shortage. However, the long lead times associated with new construction projects pose a challenge. These timeframes often prevent developers from quickly capitalizing on market opportunities.
As for other segments like rural and luxury homes, while there may be specific areas of interest, the growth potential seems less pronounced compared to new construction. This is due to the unique market dynamics and consumer preferences affecting each segment.
Overall, while new construction shows promise, the real estate market’s various segments will likely experience varied growth rates, influenced by broader economic factors and local market conditions.
Lamacchia: Well, when you talk about growth, it’s confusing to people because they confuse total sales with average prices. I don’t even think we will see average prices going up in 2024. In fact, I think we will see them settle down a bit in certain segments of the market. As far as sales go, as I said, I think it will be the same.
Barry: Luxury sales continue to be very strong in most market areas. Those buyers and sellers are far less affected by the increase in mortgage interest rates. There is also a $72 trillion wealth transfer slowly happening from Boomers to subsequent generations. That will feed the luxury market in particular.
What growth, if any, do you expect for your company next year? Do you expect your business to thrive, decline or remain stable? Why?
Barry: We expect moderate growth. As a more than 60-year-old firm, we have been through many market contractions and expansions. We anticipate that the market will begin to expand. Given the continued shifts in the market cycle, consumers will lean into companies and agents with strong reputations that offer a wide range of services. Agents who leverage luxury brands will win in competitive situations.
Lamacchia: For our company, we expect to be up much more over 2023 because we closed some very important and strategic acquisitions in Falmouth, Seekonk and Fall River. We also have other ones coming up. We expect to be up at least 25% in 2024.
D’Amico: Our company has continued to grow every year since 2020. In 2023, we will see over 30% growth in sales volume and units overall. We have increased our position within the CENTURY 21 brand and now cover 11 states with over 60 locations. In 2024, the expected growth should exceed 40% as we plan for much of the same next year.
Warren: For the coming year, I anticipate stable growth for Berkshire Hathaway HomeServices Warren Residential, despite the challenges in the market. Our focus will be on:
Increasing our current agents’ production. We’re actively enhancing our support to agents by introducing new tools and resources. This approach aims to boost efficiency and business generation, allowing agents to focus more on client engagement.
Creating company-provided leads. Recognizing the challenge of lead generation for agents, we’re leveraging our brokerage’s resources to provide leads and opportunities. This strategy is particularly vital in supporting our agents during the initial growth phases of their careers.
Recruiting excellent agents. Our ongoing recruitment efforts target like-minded agents who resonate with our values and approach. Our platform is designed to accelerate the professional growth of our agents, enabling them to achieve their personal and career goals swiftly.
With these strategies, I am confident that our company will not only navigate the market challenges but also continue to thrive and grow, capitalizing on our strengths and the dedication of our team.
What will be the biggest challenges for agents in 2024? How can they overcome these challenges?
D’Amico: The biggest challenge for agents is to stay focused and cut expenses. Just like all of the best brokerages, the best agents will cut their business expenses and remain lean through this period. This is not the time for expecting a miracle cure through a lead system or a tech product. This is the time for the basics: Prospecting your sphere of influence and putting in the effort to close deals.
Lamacchia: I believe the challenges in 2024 will be the same as 2023. There are just not enough homesellers wanting to sell their homes because they do not want to give up their interest rates. The only way agents can overcome this is work harder to find sellers that want/have to sell. Those dealing with death/divorce/estate sale situations or move ups that absolutely have to move. Agents also have to be more accepting of the fact that they have to work with more buyers. Some agents are getting frustrated and confused, and we don’t need more buyers, we don’t need more sellers. They waste all kinds of time focusing on sellers and neglecting buyers. That’s a big mistake.
Warren: In 2024, real estate agents will likely face challenges similar to those in 2023, with the persisting issue of low inventory due to high-interest rates leading to fewer transactions. This environment contrasts sharply with the boom years of 2020–2022.
To navigate these challenges, agents must:
Enhance proactive efforts. Increasing outreach and connecting with more people is crucial. Agents should adopt a systematic approach to maintaining contact and nurturing relationships, ensuring no opportunities are missed.
Leverage technology and systems. At Berkshire Hathaway HomeServices Warren Residential, we emphasize implementing effective systems and utilizing technology. These tools are designed to help agents stay organized and focused, even in a challenging market.
Agents can overcome these challenges by being more diligent in their efforts, leveraging technology, and continuously developing their professional relationships. Despite the tough market conditions, these strategies will empower agents to succeed and adapt in 2024.
Barry: The challenges will be two-fold: The first is maintaining consistency in their businesses during the lower arc of the market cycle. When the market contracts, it is much harder to achieve the same number of sales. We have been working with our agents to grow their spheres of influence though strategic relationship-building with top agents in feeder markets. The second challenge is to adapt to the changes expected in how buyer agent commissions are paid. Some of these changes are likely to take place in 2024. The better an agent is prepared, the better they will do with the new rules. We have been preparing our agents for two years.
Bennett: We tell our real estate agents to focus on what they can control. It can be emotionally draining to watch your clients, especially first-time buyers, fail to secure their dream home after multiple attempts. Continue to focus on being their advocate, their guide and their champion. Help them understand the realities and intricacies of the housing market and to budget accordingly. Be nimble and keep your fingers on the pulse of the market, so you can guide them to act quickly when the next opportunity arises. For potential sellers, ensure they understand the incredible demand that exists for new listings. Identifying potential new listings is a proactive endeavor and crucial to our business, with expired listings and FSBOs that aren’t moving providing opportunities for strategic agents.
The same principles will still apply for buyers looking to navigate a competitive market: make a strong offer and strengthen your position during negotiations and multiple bid scenarios by coming prepared with a preapproval letter. Most importantly, stay persistent and remain flexible in your home search. With many people seeking their dream home and the equity of homeownership, sellers are in a strong place financially and strategically.
What do you think needs to happen for the market to improve?
Bennett: We certainly need more housing to meet the demand of the many buyers who want to reside in the Boston area. Boston’s residential neighborhoods remain a vibrant and in-demand market for both homeowners and developers. In the past two years, for example, a remarkable 63 condo units have conveyed over $1 million in the Allston-Brighton neighborhood, the majority in new luxury developments. While we don’t have many large parcels of land that can be utilized for housing, developers continue to find vacant lots and other structures that can be repurposed into much-needed residential units. The city has been incentivizing the conversion of vacant office buildings into housing, but it’s not yet clear if that alone will be a viable long-term solution to Boston’s housing shortage. Developers, however, have found creative ways to give institutional structures and other buildings around the city new life as residential space.
Warren: The key to improving the housing market lies primarily in reducing interest rates. High rates are currently deterring potential sellers who benefit from rates as low as 2.75–4%. These homeowners are only compelled to sell due to major life events such as marriage, divorce, death or job relocation. As a result, many who wish to move are staying put, dissuaded by the higher cost of borrowing today compared to recent years.
Additionally, other factors, such as improving economic stability and consumer confidence, could also play a role in market recovery. A balanced approach that considers both financial and socio-economic factors will be crucial.
In essence, a combination of lower interest rates and a stable economic environment would encourage more movement in the housing market, benefiting buyers, sellers and the industry as a whole.
Barry: We need more housing to be built — which cannot happen overnight. The under-building trend has been happening for decades. It will take a multifaceted, all-hands-on-deck approach to make the kinds of gains we need to satisfy today’s buyer pool. That would help slow the rising cost of housing — that and, of course, lower interest rates.
Lamacchia: The No. 1 thing that has to happen is interest rates need to come back down to earth. They are nearly three times what they were two years ago. It’s too much of an increase too fast. I believe they will start to cut down but not in any large way until we get into 2025 and 2026.
Which neighborhoods or suburbs in Greater Boston have the brightest housing outlook in 2024?
Barry: We predict that some of the nearby western suburbs will have increased listing activity in the spring. New luxury developments in downtown Boston are offering some very attractive deals that might bring in right-sizing buyers from those suburbs. There may also be an increase in inventory in second home markets, depending on the trends within the economy. Many folks bought second homes in driving-distance locations during the pandemic. But, some of them are now traveling to locations around the world for new adventures and spending less time in their vacation homes.
Bennett: There are numerous construction projects across Greater Boston that will open up much-needed housing options in the near future. Examples include a plan to transform the Fenway neighborhood with 266 residential units, including affordable housing; the completion of the 51-story South Station Transportation Center, with 166 condos; Dorchester Bay City, which is replacing the former Bayside Expo Center and will offer 1,957 residential units (20% affordable) in Columbia Point; almost 500 new condos and apartments (some income-restricted) at the former home of Skating Club of Boston in Allston; the addition of a 90-condo building next to the former Poor Clare Monastery in Jamaica Plain; 343 apartments (with a record 25% set aside for buyers at the lower end of the median area income) and potentially more to come on land donated by Harvard as part of its expansion plans into Allston-Brighton; and the conversion of two adjacent brownstones on Commonwealth Ave. in Back Bay, once owned by Berklee College of Music, into five boutique residences.
We are hopeful that projects like these will be important to the long-term goal of alleviating the pressure on Greater Boston’s housing market, adding much-needed inventory and helping to normalize pricing for buyers at all income levels.
Lamacchia: The neighborhoods and the communities with the better school systems always fare a bit better. But, even more of the working class communities in the suburbs are doing better because people are getting priced out of higher end markets.
Warren: In 2024, I expect most neighborhoods in Boston to continue showing strength and post year-over-year gains. The key reasons for this resilience are the persistently low inventory and a lack of new construction, which insulates these areas against major market fluctuations.
Focusing on specific areas, Watertown stands out due to its recent renaissance. Large redevelopments like the Arsenal project have significantly raised its profile, attracting a diverse group of buyers and renters. Its advantageous location, with close proximity to Boston and easy highway access, positions it for further growth and development.
Overall, the housing outlook for Greater Boston’s neighborhoods and suburbs appears bright, bolstered by strategic developments and enduring demand.