New home construction in the United States is lagging behind market demand. Constrained by factors such as rising interest rates, increasing building material prices, scarcity of available land parcels, and a shortage of skilled labor, new home construction faces challenges.

Furthermore, there are obstacles in the supply of existing homes. Some homeowners are optimistic about rising home prices and are unwilling to sell, while some consumers who are planning to upgrade their homes are reluctant to give up ultra-low mortgage rates, resulting in a slowdown in housing turnover and contributing to insufficient inventory and supply.

In terms of demand, first-time homebuyers are re-emerging in the market, accounting for a significant portion of existing home sales. The National Association of Realtors (NAR) predicts that existing home sales in the United States will increase by 13.5% in 2024, and the median home price is also expected to increase slightly by 0.9% to reach $389,500.

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Especially in the southern and midwestern regions, the housing market is particularly optimistic due to employment growth and low housing affordability ratios. Real estate market potentials in markets such as Austin and Dallas-Fort Worth in Texas are particularly worth noting.

However, in stark contrast to the booming residential market is the plight of the commercial real estate market. Affected by the COVID-19 pandemic and remote work trends, office vacancy rates across the United States continue to rise. Coupled with the Fed's interest rate hikes, commercial real estate prices in the United States have plummeted by 11%, wiping out gains from the past two years.

Office vacancy rates have reached a staggering 19.6% in some major cities, far exceeding historical records. The rise of remote work and demands for cost-cutting by businesses have put the commercial real estate market in the face of long-term impacts. Particularly, the long-term effects of remote work on the demand for office space will become a crucial variable in the future commercial real estate market.

Such significant market changes also bring pressure to the banking system, especially small banks may face run risks. If the default rate of commercial real estate loans reaches 10%, it will result in an additional loss of about $80 billion to banks and may even put more than 300 banks, especially smaller regional banks, at risk of runs.

In such a market environment, investor confidence in Real Estate Investment Trusts (REITs) is also affected by the high-interest rate environment. However, as the Fed's interest rate hike cycle nears its end, the REITs market is expected to perform better than expected. The emergence of emerging industry real estate REITs is particularly noteworthy, driven by the AI ​​boom, the demand for data center space REITs is continuously increasing. In this context, investors are expected to seek excess returns through the REITs market and find new investment opportunities in the transformation of the commercial real estate market.