The year 2024 has been an eventful and challenging year for the real estate market across the United States, including right here in Western New York. From fluctuating interest rates to legislative changes and evolving rental trends, the market has kept buyers, sellers, investors, and real estate professionals on their toes. Let’s break down the year’s key developments and trends.
Key Trends in the Residential Market Buying and Selling Homes
- Interest Rate Impact: Mortgage rates remained elevated throughout 2024, making affordability a major hurdle for buyers. According to the National Association of Realtors (NAR), the average 30-year fixed mortgage rate hovered around 7.5% this year, which led to decreased buyer activity.
- Home Prices: Despite the challenging interest rate environment, home prices in Western New York remained relatively stable compared to national trends. NAR reports a 3% year-over-year price increase nationally, while Western New York saw a modest 2% increase, reflecting its affordability and stability.
- Days on Market: Homes lingered longer on the market this year, with the average time to sell increasing to 45 days, compared to 30 days in 2023. Sellers had to price more competitively and make upgrades to attract buyers.
Rental Market
- Rising Rents: Rental prices saw a 4% appreciation year-over-year in Western New York, in line with national trends reported by Zillow. The demand for rentals remained strong, especially among younger demographics and those unable to buy due to high interest rates.
- Leasing Delays: Apartments took slightly longer to lease, with an average of 60 days to secure tenants, reflecting a market where renters had more choices.
Vacation and Furnished Rentals
- Market Shifts: The short-term rental market faced significant changes in Buffalo due to new local legislation. This led many property owners to transition from short-term to long-term rentals.
- Investor Adaptation: Conversely, some investors moved their long-term rentals into furnished short-term rentals, seeking higher profits. This shift has driven demand for management services, which we’ve seen firsthand at 716 Realty Group, 716 Vacation Rentals, and 716 Property Management.
Commercial Real Estate Market
Market Performance
- Office Space Challenges: According to reports from industry leaders like, office space demand continued to struggle in 2024 as hybrid work models became the norm. Locally, Vacancies in downtown Buffalo remained higher than pre-pandemic levels and the new Mayor Scanlon’s task force is trying to understand what to do. Buffalo Place led a exciting study this summer and we hope the city bounces back. For the region to succeed, the Central Business District in downtown has to see changes to vacancy and more people around.
- Retail Resilience: Retail spaces performed better than expected, with increased activity in suburban areas driven by local businesses and franchises. National Builders Association data highlights a 2% increase in new retail construction starts.
- Industrial Growth: The industrial sector, particularly warehousing, saw steady demand as e-commerce continued to grow. Western New York benefited from its strategic location, attracting logistics companies.
Investor Focus
- Adaptive Reuse: Investors increasingly sought to repurpose old commercial buildings into mixed-use developments, combining residential, retail, and office spaces to maximize returns.
- Cap Rate Stability: Despite high interest rates, commercial cap rates in Western New York remained relatively stable compared to national averages, making the region an attractive option for investors.
Challenges and Opportunities for 2024
- Legislative Impact: Regulatory changes in Buffalo required short-term rental owners to adapt quickly, resulting in increased interest in professional property management services.
- Interest Rate Pressures: High borrowing costs limited market activity, but creative financing solutions like DSCR loans and partnerships gained traction among investors.
- Investor Strategy: The focus for many has been finding the “right play” in a complex market. Diversifying portfolios between short-term and long-term rentals has proven to be a successful strategy.
Looking Ahead to 2025
As we close out 2024, it’s time to focus on positivity and profitability in the year ahead. Here’s what we anticipate:
- Predictability: The real estate market may stabilize as interest rates are expected to plateau, allowing buyers and sellers to make more confident decisions.
- Growth in Rentals: The rental market, both short-term and long-term, will remain strong, with demand for furnished rentals continuing to rise. However, a flight to quality is playing out and will have renters of all timelines wanting professional management and white glove service more than ever.
- Community Commitment: At 716 Realty Group, 716 Vacation Rentals, and 716 Property Management, we’re more committed than ever to supporting our community with best-in-class services across all divisions!
716 Realty Group: Your Partner for 2025 and Beyond
Across our divisions, we’re proud to be a cornerstone of Western New York’s real estate market. Whether it’s buying, selling, renting, or managing properties, our diverse expertise and dedication make us the best in class.
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