As many real estate professionals have discovered in their first few years, the real estate market is constantly changing. By the end of 2024, several properties may see more decline in value than others. This can be affected by many factors, such as the economic climate, changes in buyer preferences, and shifts in environmental policy.
Knowing these trends is also vital for investors, homeowners, and prospective buyers. Below, we have listed 5 types of homes that are expected to see a decrease in value over the next year.
Homes in Climate-Vulnerable Areas
Properties in areas prone to climate-related disasters, such as coastal areas susceptible to flooding zones, hurricanes, and wildfires, might substantially decline in value. Areas likeย Palm Beach and Naples, Florida,ย are less likely to decline solely based on the overwhelming demand for such areas.
The rising frequency and magnitude of climate-related catastrophes have raised awareness and increased consumer vigilance. Insurance rates in these areas have risen in recent years and continue to do so; in some cases, insurance companies are even removing coverage completely. This has made the homes in these areas less appealing to potential buyers, resulting in an increase in demand and, in turn, an increase in the value of homes.
Outdated Single-Family Homes
Single-family homes that were last renovated or updated years ago appeal differently to prospective buyers. Buyers today are looking for modern conveniences, energy-efficient systems, and homes requiring minimal work. Old-fashioned homes with old heating systems with poor insulation, dated bathrooms and kitchens, or the need to be equipped with the latest technology in home automation, are becoming more difficult to sell for higher prices.
The price gap between modern and old homes will likely increase as buyers’ preferences shift towards more sustainable, modern, and technologically savvy homes.
Luxury Urban Condos
The pandemic has shifted many people’s tastes away from urban dwellings towards more spacious rural or suburban houses. The trend will likely continue into 2024, which could affect the value of high-end urban condominiums. Luxury condos in cities, once valued at the highest prices for their location, amenities, and facilities, are seeing less demand.
As remote work becomes increasingly common, workers are seeking more space and comfort than proximity to cities’ job centers. Furthermore, the cost of maintenance associated with luxury condominiums is becoming a barrier for potential buyers, which is increasing the homes’ value.
Homes Near Polluting Industries
Properties located near polluted industries, such as refineries, factories, or frequently used roads, are expected to increase in value. A growing awareness and concern for pollution and health influence buyer choices.
The homes in these areas typically suffer from low conditions for air, pollution, and other environmental dangers, making them less appealing. Since the marketplace shifts toward more sustainable living, such homes will likely lose appeal and value.
Oversized Properties in Declining Neighborhoods
Properties that are too big, especially those in areas experiencing decline or declining facilities, are predicted to lose value. These properties typically have expensive maintenance and property taxes, which could be significant, but without the advantages of living or being in a community.
As smaller communities and homes with robust local economies and amenities become more popular and thriving, the demand for larger homes in declining areas is likely to decrease, resulting in a decrease in their value.
Why These Homes May Decrease in Value
A variety of factors can contribute to the anticipated decrease in the value of these types of homes. Changes in buyer preference for sustainability, modern facilities, and the effects of climate change are key factors. In addition, the shift to remote work is changing the traditional need for homes in urban areas. The market for real estate is susceptible to these changes, and properties that do not conform to the changing trends or have greater risk will likely be able to see their value decrease.
