2024 is shaping up to be a year of significant shifts in the housing market. With mortgage rates expected to fall slightly, many predict an easing in affordability issues. However, certain types of properties are likely to see their values decline.
From 2020 to the middle of 2022, median home prices peaked above $400,000, making affordability a significant challenge for many buyers. As we navigate the coming year, it’s crucial to be aware of which types of homes may not hold their value.
Here are the 10 homes that experts believe will see a drop in value in 2024.
1. Large Suburban McMansions
Over the past few decades, sprawling suburban homes, often called “McMansions,” have been symbols of affluence and success. However, in 2024, these oversized properties are expected to take a hit.
Younger generations, particularly millennials and Gen Z, are prioritizing smaller, more efficient homes that align with their lifestyle choices and environmental concerns. The trend towards minimalism and sustainability is pushing buyers away from these large, energy-consuming houses.
Additionally, the cost of maintaining and heating these massive properties is becoming increasingly prohibitive. With rising utility costs and the growing popularity of remote work, many homeowners seek residences that are not only cost-effective but also closer to urban amenities.
2. Homes in Climate-Vulnerable Areas
Climate change is a present reality affecting the housing market. Properties in areas prone to natural disasters such as hurricanes, floods, and wildfires are seeing their values decline.
Buyers are becoming more cautious about investing in homes at risk of significant damage or even destruction. Insurance costs for these properties are skyrocketing, adding another financial burden for potential homeowners.
Moreover, the increasing frequency and severity of natural disasters are leading to stricter building codes and zoning laws in vulnerable areas. These regulations can limit development and make building or repairing homes more expensive, reducing the appeal and value of these properties.
3. Outdated Urban High-Rises
While urban living remains popular, not all city dwellings are created equal. Older high-rise buildings, particularly those with outdated amenities and designs, are expected to lose value in 2024.
Modern buyers and renters seek properties with contemporary features, energy efficiency, and smart home technology. High-rises built decades ago often lack these qualities, making them less attractive in the competitive urban market.
Furthermore, maintenance and renovation costs for these older structures can be significant. Older high-rises struggle to keep up with the competition as newer, more appealing residential towers continue to emerge. This dynamic is leading to a surplus of less desirable urban properties, pushing their values down as they fail to meet the expectations of today’s market.
4. Vacation Homes in Remote Locations
The allure of a secluded vacation home has lost some of its charm in the wake of the pandemic. Many people are now seeking vacation properties closer to home and easier to access.
Remote vacation homes, especially those in areas without robust infrastructure or healthcare facilities, are seeing a decline in interest and value. Travel restrictions and the desire for convenience steer buyers towards locations that offer relaxation and accessibility.
In addition, the ongoing economic uncertainty makes buyers more cautious about investing in secondary properties. Often seen as luxury rather than necessity, vacation homes are among the first to be reconsidered when tightening budgets. The shift in travel patterns and financial priorities is leading to a drop in demand for these remote getaways, negatively affecting their market value.
5. Aging Single-Family Homes in Declining Neighborhoods
These properties often lack investment in local infrastructure, schools, and public services, making them less attractive to potential buyers. The socioeconomic factors contributing to neighborhood decline, such as job loss and crime rates, are major deterrents for homebuyers looking for stability and growth potential.
Moreover, aging homes require significant upkeep and modernization to meet current standards. Many buyers prefer newer homes or properties that require minimal renovations.
6. Rural Properties Far from Urban Centers
Rural properties far removed from urban centers face decreasing values as the demand for proximity to amenities, healthcare, and employment opportunities grows. While some people have embraced the rural lifestyle, the trend is shifting towards suburban areas that offer a balance between space and accessibility. The isolation of rural properties, coupled with limited access to high-speed internet and modern conveniences, makes them less attractive to buyers.
Furthermore, the economic prospects in many rural areas are not as robust as in urban or suburban regions. This lack of economic opportunity can lead to lower property values, as potential buyers prioritize locations with better job markets and infrastructure.
7. Homes with High Property Taxes
Homes in areas with high property taxes are becoming less appealing to potential buyers, especially in the current economic climate. With inflation and cost-of-living expenses rising, many people are seeking ways to cut costs, and high property taxes can be a significant burden. Buyers are increasingly looking at the total cost of homeownership, which includes taxes, making properties in high-tax areas less competitive.
Additionally, some states and municipalities are facing budget shortfalls and are raising property taxes to cover deficits, further deterring potential buyers. The financial strain of high taxes can outweigh the benefits of living in certain desirable areas, leading to a decrease in demand and, consequently, a drop in property values.
8. Condos with High HOA Fees
While HOAs can provide valuable services and amenities, exorbitant fees can deter potential buyers. In an economic environment where every dollar counts, high HOA fees are considered unnecessary, making these condos less attractive.
Moreover, high HOA fees can sometimes indicate underlying issues with the building’s financial health or upcoming large maintenance projects, which can be a red flag for buyers.
9. Homes with Poor Energy Efficiency
In an era where sustainability and energy efficiency are becoming increasingly important, homes with poor energy efficiency are losing appeal. Buyers are now more aware of energy-efficient homes’ long-term cost savings and environmental benefits. Properties that lack modern insulation, energy-efficient windows, and appliances are considered less desirable, as they tend to have higher utility costs and a larger carbon footprint.
Additionally, government incentives and rebates for energy-efficient upgrades encourage buyers to seek homes that already meet these standards.
10. Single-Purpose Luxury Properties
Homes with features like elaborate wine cellars, private theaters, or large indoor pools, which cater to very specific tastes, may not appeal to the broader market. As economic uncertainties persist, buyers seek homes offering functional, multi-purpose spaces rather than extravagant, single-use amenities.
The maintenance and upkeep of such luxury features can also be costly, further deterring potential buyers. As the market shifts towards practicality and cost-efficiency, these single-purpose luxury properties are expected to see a demand reduction and a subsequent drop in value.
The housing market in 2024 is influenced by a myriad of factors, from environmental concerns to economic shifts. If you’re considering buying or selling a home, staying informed about these trends can help you make better decisions.
The key takeaway is that market preferences are changing, and properties that fail to adapt to new realities will likely see their values plummet.
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Davin is a jack-of-all-trades but has professional training and experience in various home and garden subjects. He leans on other experts when needed and edits and fact-checks all articles.