Market Insights

2024 Real Estate Market Overview: What the Numbers Tell Us

December 15, 2024• 7 min read

According to the latest data, home prices in 47 of America's 50 largest metropolitan areas have risen since the start of 2024. The national average increase is 3.6% — right in line with the typical annual appreciation rate. This is happening despite the Federal Reserve's aggressive efforts to slow the economy following the COVID era. So why aren't these measures working on real estate? That's what this post will explore.

The Market Has Its Own Cycle

Real estate operates on its own seasonal cycle. From November through March, prices typically soften. Starting in April, demand picks up and prices begin rising again — and buyers and sellers adjust their timing accordingly. In spring and summer, more sellers list their homes, inventory increases, and prices moderate slightly. That natural balance of supply and demand creates a healthy market under normal conditions.

But starting with COVID, a chain of events unfolded that no one had anticipated.

In the early days of the pandemic, demand dropped sharply, briefly creating excess supply. Then the government intervened — injecting trillions of dollars into the economy, pushing interest rates to near zero, and flooding the market with liquidity. Demand surged while supply stayed constrained, because many homeowners couldn't or wouldn't list. The result was price growth at levels never seen before in modern history.

This artificial inflation spread across the broader economy, creating the inflationary environment we've lived in since. To fight it, the Federal Reserve raised interest rates starting in 2022 — the first significant rate hikes since the 1990s. The goal was to reduce borrowing capacity, slow consumer spending, and eventually bring inflation under control. Unemployment was supposed to rise, millions were supposed to lose jobs, and that economic pain was supposed to cool things down.

It didn't go as planned. And ordinary people bore the brunt of the attempt.

What Did Crash — and What Didn't

When the Fed started raising rates, the initial shock rippled across several sectors, and many predicted a broad collapse. As it turned out, several of those predictions came true — just not in the sectors most people were watching.

Crypto collapsed spectacularly. About $1.8 trillion in value evaporated. Most people noticed.

Banks also suffered. In 2023, five banks failed — the largest banking collapses since 2008 — with combined asset values of several billion dollars. The Federal Reserve responded by creating the Bank Term Funding Program, allowing banks to take on additional short-term borrowing. Banks collectively accessed roughly $164 billion through this facility.

Tech took a hit as well. China's semiconductor restrictions impacted several major technology sectors. The government responded with approximately $166 billion in direct and indirect support to affected companies.

Commercial real estate is quietly in crisis. The shift to remote work during COVID emptied office buildings across the country. Lease obligations initially kept cash flowing, but the underlying problem festered. More importantly, commercial real estate is directly tied to interest rates — when rates rise, property values fall, because the cost of carrying the debt increases while income stays flat or declines. According to Capital Economics, U.S. commercial real estate lost $590 billion in value in 2023 alone. Globally, the loss exceeded $1 trillion.

Many leveraged real estate companies — syndications and partnerships — took on enormous debt during the era of near-zero rates. Commercial mortgages aren't structured like residential ones: they're typically 3, 5, or 7-year adjustable loans, not 30-year fixed. In a normal market, operators refinance or sell when the term ends. Today's market is not normal. An estimated $2.7 trillion in commercial real estate debt is due for repayment by 2027, and many lenders aren't willing to refinance properties that have lost significant value. Private investors are queuing up to buy this distressed debt at a discount — and they'll likely absorb much of the damage before a systemic collapse occurs.

Residential real estate, on the other hand, has not collapsed. Prices are up 43% compared to pre-COVID levels, and while the rate of growth has slowed, prices have not fallen meaningfully at the national level.

Why Residential Prices Won't Drop

Several forces are keeping residential real estate prices elevated.

Supply is severely restricted. The country faces a shortage of roughly 6 million homes relative to natural demand. In a normal market, there are 6–7 months of available inventory. Recently, we've seen only 2–3 months of supply. Weekly new listings are running at 77,000–80,000 homes — a fraction of the 250,000–400,000 that were listed weekly during the 2008–2011 period. And unlike that era, today's sellers aren't in distress: 40% of homeowners have no mortgage at all, and 70% have a mortgage balance significantly below their home's current market value.

Locked-in low rates keep sellers on the sidelines. Over 70% of American mortgage holders have rates below 5%. Selling means giving up that rate and taking on a new one at 7% or higher — on a home that now costs substantially more. So many potential sellers are simply staying put, further constricting supply.

New immigration has increased demand. An estimated 6 million new arrivals have entered the country in recent years, adding pressure to an already undersupplied market. The demand is real — these are people who need housing.

Asian buyers have entered the market in force. Instability in China's economic and real estate markets has pushed a significant number of wealthy buyers toward U.S. real estate. These buyers often purchase with cash, moving quickly and bidding aggressively. In some markets, homes have been receiving offers 10% above asking price as a result.

The Commercial Real Estate Wild Card

Two competing theories exist about where the next major disruption will come from.

The first points to U.S. commercial real estate. The office sector collapse is real, the debt load is enormous, and the timeline for repayment is approaching. Most analysts believe private capital will absorb the worst of it — but not without pain.

The second points to China. China's real estate crisis has been deepening since 2019. Vast numbers of high-rise units remain unfinished or unsold, developers are insolvent, and prices continue to fall. Since 2022, home sales in China have declined by 5–6% per year. Bloomberg estimates that each 5% drop in Chinese home prices represents a $2.7 trillion loss in market value — in a sector worth an estimated $135 trillion. China's largest commercial banks recently committed approximately $18 billion in new mortgage credit to stabilize the market. It may buy time, but the structural problem remains.

No one knows exactly when or how these pressures will resolve. What's clear is that the debt is real, the timeline is closing in, and the outcome will eventually arrive — later rather than sooner, based on current evidence.

What Does This Mean for You?

Despite all of this, Boston-area real estate remains competitive. Homes are receiving multiple offers and selling above asking price. Seasonal softening in late 2023 briefly created negotiating opportunities — significant discounts were secured on several transactions during that window — but the underlying demand has not disappeared.

The core lesson remains: don't try to time the market. The economy will do what it's going to do. Your job is to be ready when your moment arrives — financially prepared, well-informed, and working with the right people.