2024 Year in Review, & 2025 Preview
Each month, I publish a newsletter with a look at the noteworthy stories in real estate (and outside real estate, since things tend to be more interconnected than we realize.) Reading back through those newsletters is a great way to remind myself what some of the key ideas have been in the last year.
For this 2024 Year in Review, I start with those key financial/investors stories, and then also review the bigger global & national context in which that all occurred. I’ll look at SIX areas altogether, and throughout, I’ll provide a look forward into the 2025 outlook in each area.
1. The Real Estate Freeze Continues
In 2023, a red-hot real estate market transitioned into a “market on ice”. New listings fell to historic lows, largely due to the “mortgage lock-in effect”, whereby many homeowners has lower fixed-rate mortgages than they could get on a new purchase, and therefore were disincentivized to move or trade up.
Despite expectations for a “thaw” in 2024, it didn’t really happen. There are still a lot of people out there with low mortgage rates…
…and the expected decline in mortgage rates didn’t really materialize in 2024 — they fell a bit over the summer, but then climbed back and up, and they’re still hovering around 6.75%-7.00%.
And it really did seem like rates would fall more than that. Even *I* broke my normal rules and made some predictions about mortgage rates headed into 2024. How good were my predictions? Well, let’s just say this shows why I had my “make no predictions” rule in the first place:
Mortgage rates have peaked, and the 7.79% figure will not be exceeded in the next two years. (95% confidence) RIGHT so far
Mortgage rates will keep falling, and will be lower in 6 months than they are today. (80% confidence) WRONG, they were slightly higher
Mortgage rates will fall below 6% by the end of 2024. (70% confidence) WRONG, though they did touch 6.08% in September…close
Mortgage rates will fall below 5% by the end of 2024. (50% confidence) SUPER WRONG
2025 Outlook: The same expectations are pretty reasonable headed into 2025: the Fed will likely cut rates (though perhaps not as much as they had planned, as they keep a close eye on inflation), mortgage rates will probably fall, and that may lead to a thaw in the market wherein buyers will be able to better afford homes and sellers will be more willing to list. But I’m not making any specific predictions — not going to fall into that trap again.
2. Another Bumper Year for Stocks
In 2021-2022, real estate had two record-setting years in a row, with home prices and rent growing at historic rates. Meanwhile, the stock market had an awful year in 2022.
The tables have turned in 2023 and 2024: the stock market had its second strong year in a row, while real estate lagged. (My Annual Portfolio Reports give some insight into this dynamic.) The two bars on the far right show the 20% annual gains in 2023 and 2024, which hasn’t happened since the 1990’s:
2025 Outlook: Here too, short-term predictions are a perilous business. Better to think about stocks AND real estate investing as long-term plays, and assume that they’ll revert to long-term averages given enough time. (How do stocks compare to rentals in the long run? I took a deep dive into that question in this article.)
3. AI is Everywhere, All at Once
You can’t go a single day or open a single newsletter without hearing about AI. All the big tech firms are promising huge investments in AI, trying to one-up each other with the grandness of their plans in order to win the favor of Wall Street investors, who can’t get enough.
There is certainly huge promise in AI, even beyond the increasingly common everyday applications such as chatbots and image generation. But is there an AI bubble? The AI wave certainly carried the giant tech companies to new stock market highs this year, which drove a big portion of the overall stock market gains for the year:
2025 Outlook: China’s DeepSeek stunned Silicon Valley with the recent release of their AI tools, which they claim were built much faster and cheaper than US versions while achieving similar performance. This struck a blow to those same US tech firms, and may usher in a new era of “doing more with less” in the AI arms race.
4. Crypto Winter Turns to Spring
I’m not a crypto investor, and believe the whole thing is basically a scam. It’s not a currency — after 16 years, you still can’t actually buy much of anything with it — and it’s obvious at this point that Bitcoin and its hundreds of imitator “coins” exist only as speculative bets for investors, not as a way to transform or decentralize the world’s banking systems (as breathless crypto bros would have you believe.)
And yet, it persists. After the crypto winter of 2022-2023, the anticipation of more a more favorable regulatory regime in the Trump administration send Bitcoin prices “to the moon”, touching $100,000 for the first time:
2025 Outlook: Crypto still faces a set of foundational challenges that seem insurmountable — namely, achieving legitimacy and utility beyond the world of speculative investing. President Trump’s release of his own “meme coin” prior to taking office did nothing to help this, and was met with criticism by crypto insiders because it threatened to make the whole industry look like opportunistic grift. (If it looks like a duck, walks like a duck, and quacks like a duck…) Still, crypto coins will continue to survive as long as there are people willing to pay for them, and so long as they can survive regulatory scrutiny.
5. The Political Right Ascends
Beyond Donald Trump’s reclaiming of the White House, right-leaning political parties are having success all over the world, most strikingly in Europe where they had been (understandably) relegated to the sidelines since World War II.
But a set of “new populist” viewpoints including staunch opposition to immigration, and a primary focus on domestic economic factors such as the cost of living and home prices, have allowed right-wing parties (including in some cases far-right parties) to make gains, threatening the center-left consensus that has dominated Western democracies for nearly 80 years:
2025 Outlook: These political shifts are usually measured in decades, not years, so it may take some time to understand whether the current moment represents an enduring shift, or a temporary aberration. Already in some places, right-wing groups have fallen as fast as they ascended: in the UK in 2024, the Labour Party won a landslide election, restoring the center-left party to power after 14 years of control by the Conservative Party. Young voters in particular may be more focused on results than hardened ideology or party loyalty, which suggests that quick political pendulum swings may be more common going forward.
6. The Climate Tipping Point
The globe has been warming slowly for many decades. But in 2023, it started warming FAST, baffling climate scientists, blowing past worst-case scenarios, and raising fears that we had past a tipping point. That caused 2023 to be the hottest year on record — by a LOT.
Until 2024, which was even hotter:
This BBC article has some excellent visualizations of these inexorable trends, which tell the story much better than I can:
2025 Outlook: While the end of the El Nino wind patters may provide a short-term respite from the temperature record-setting, nothing in the long-term trajectory suggests that humanity will avoid increasingly severe consequences of climate change. If this sounds ominous, well…it is.
About the Author
Hi, I’m Eric! I used cash-flowing rental properties to leave my corporate career at age 39. I started Rental Income Advisors in 2020 to help other people achieve their own goals through real estate investing.
My blog focuses on learning & education for new investors, and I make numerous tools & resources available for free, including my industry-leading Rental Property Analyzer.
I also now serve as a coach to dozens of private clients starting their own journeys investing in rental properties, and have helped my clients buy millions of dollars (and counting) in real estate. To chat with me about coaching, schedule a free initial consultation.
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