In this podcast episode, I sit down with Ben Miller, CEO of Fundrise, to get his updated take on the real estate market looking into 2024 and beyond. The past year, 2023, was tough for institutional real estate investors, with 11 rate hikes and a sharp increase in mortgage rates that began in early 2022, causing property prices to drop. Ben thinks that the market hit its lowest point in October 2023 after a year and a half of decline. He’s now feeling optimistic, expecting interest rates to fall.
We dive into several important topics during our discussion:
- Ben shares why he believes the market bottomed out in October 2023 and discusses some less obvious signs that support this view.
- We look at why some investors might choose to sell their properties near this perceived market bottom.
- Ben talks about the strategy of using cash from one fund to support investments in another.
- He provides insights on the advantages of buying office properties at big discounts right now.
- We discuss how the rise of e-commerce and the work-from-home trend could permanently increase the value of residential properties.
- Ben stresses the importance of aligning investments with broader economic trends that are gaining momentum, rather than those on the decline.
- We explore the potential for real estate prices to rise significantly in 2024 and 2025.
- Ben explains how they calculate the Net Asset Value (NAV) for properties within the fund.
- He emphasizes the unpredictable nature of major market shifts and the benefits of staying invested through these times.
- Reflecting on a quote from Ray Dalio, Ben agrees it’s better to be broadly correct than exactly wrong, especially when forecasting interest rates at the end of the year.
- We consider the idea that a recession could actually be good for real estate if it leads to a sharp decrease in interest rates.
Mark Zandi, a leading economist, also weighs in, suggesting that the housing market has likely reached its lowest point in terms of sales and demand. He predicts that the 30-year mortgage rate might drop to 6% instead of rising to 8%, which could signal a turnaround, though he cautions that recovery will take time.
You can catch this insightful discussion on Apple or Spotify, or by using the embedded player in the podcast section. If you’re interested in investing with Fundrise, they’ve made it easy to start with a minimum investment of just $10.
