1031 Trends for 2024

As we pull out our crystal ball looking towards 2024, what do we see?

Mortgage rates rose to 7.79% in October of 2023, but have dropped through November of 2023 to 7.29%, according to Freddie Mac.

Here are some predictions from experts for the 30-year, fixed-rate mortgage in 2024:

  • Lawrence Yun, chief economist at the National Association of Realtors, says “Mortgage rates look to head towards 7% in a few months and into the 6% range by the spring of 2024.”
  • The Mortgage Bankers Association (MBA) says “mortgage rates to end 2024 at 6.1% and reach 5.5% at the end of 2025…”

What are we seeing in the 1031 industry?

1031 Exchanges are still happening, but maybe not as many as 12-24 months ago. There are many 1031 Exchangors that own property without debt, so they are not concerned about mortgage rates. They sell their relinquished property and purchase the replacement property with cash. These clients are taking advantage of the current market conditions.

In the commercial arena, we are seeing an increased interest in multi-family properties. In addition, some of our residential property owners are selling and moving their investments into Delaware Statutory Trusts (DST). If you are not familiar with a DST, read more about this product here - https://www.security1stexchange.com/resources/delaware-statutory-trusts.

Still, a majority of exchanges are taxpayers selling a rental house or condominium and plan to purchase another residential property. Some of these taxpayers are moving from one state to another, so the 1031 allows them to defer all of their taxes. Some are just upgrading their property, or selling to purchase multiple properties.

Whatever your situation, the 1031 Exchange can assist in deferring your taxes so that you can maximize your profits.

Before considering a 1031 Exchange, please consult with your tax advisor and the professionals here at Security 1st Exchange to understand the 1031 requirements.