The year 2023, labeled as the "disappointing year," left both buyers and sellers frustrated. High mortgage interest rates and limited housing supply resulted in a continuous rise in home acquisition costs, with homeowners unwilling to move from low fixed rates, contributing to a flourishing demand for rental properties.

However, as the new year arrives, Jonathan Miller, co-founder of Miller Samuel Real Estate, expresses optimism about the future.

Miller believes that 2024 will be a "year of gradual transformation." With the gradual decline in mortgage interest rates, the real estate market is expected to recover gradually. Despite limited inventory, there may be a slight increase in home prices.

Recent survey results from the National Association of Realtors indicate an 18% year-on-year decrease in U.S. home sales volume in 2023. The decline is attributed to high mortgage interest rates and the issue of limited housing supply.

Nevertheless, as home acquisition costs continue to rise, rental costs are also on the incline. Recent research from online rental platform Zumper shows that, on average, homebuyers spend 52% more per month than renters, reaching a historical high.

Despite this, with the gradual decline in mortgage interest rates, homebuyers' confidence is expected to restore gradually, leading them back to the housing market. Simultaneously, the demand for rental properties is expected to alleviate.

Miller anticipates that the real estate market in 2024 will be better, more active, and more vibrant than in 2023. He predicts a significant further decline in mortgage interest rates. Rough estimates suggest that, in 2024, the 30-year fixed-rate mortgage interest rates will approach 5%-6%, aligning more closely with the long-term average.

This is expected to be acceptable for both buyers and sellers, encouraging them to engage in the housing market. It will also prompt renters to return to the market from their observational stance, subsequently leading to an increase in home sales. Miller adds, "But this could potentially reverse the fate of the U.S. real estate market, as the housing market has, for the most part, been in a state of decline recently, unlike other economic sectors."

Additionally, renters in New York will experience some relief in 2024. Although New York is the most expensive city for renting in the U.S., Miller states that rental costs have started to decline. He further notes, "I believe rents will decrease; Manhattan rents peaked in August this year and have dropped by nearly 9% by November, a bit more than expected."