The recent real estate trends can be best defined as a medley of both positive and negative movements. First, the prices of real estate developments continue to rise steeply, as a result of many factors, including both the impending economic decline and the advent of new buyer demographic, a.k.a. Millennials. Still, some real estate sectors aren’t so optimistic about the rise of home prices, fearing that a housing crash iceberg is straight ahead. Here are the latest real estate trends that are ushering in the New Year.
Rise of investments
Since the economic decline of 2018, real estate investments in the US have increased by 19%, registering $470.7 billion. One of the most impacting real estate trends, it gained additional momentum as domestic institutions decided to increase their net holdings, while new technologies like real estate management platforms empowered property owners’ management abilities. Logistics is still the most preferred target of investment in the real estate market.
Home prices grow steadily
Unlike the market jump in 2017 and 2018, home prices are predicted to rise at a slower rate. The first reason behind this is the continuing economic uncertainty that prompts home sellers to hold on their properties, and the second is the increased mortgage rates which seem to keep home investors at a distance. An anticipated 8 percent increase in new home development also undoubtedly contributes to this trend.
Millennials still No.1 buyers
Millennials have come to dominate the residential real estate buyer’s market. With the “connected generation” landing stable jobs with household incomes reaching $88,000, most of them seem to prefer middle- and upper-middle class homes that comprise 45% of the market. To tap into this bull market, sellers need to offer sustainable homes with plenty of usable space as well as to take advantage of Internet marketing.
Suburban honeypots
With home prices going through the roof, Millennial buyers are looking for more affordable localities to settle, which in this case means smaller, suburban towns, on the fringes of major cities. Dubbed as “Hipsturbia” communities, there’s been the rise of live-work-play neighborhoods that match the safety and affordability of the suburban life with the transit routes, 24-hour amenities, and walkability of big metros.
Demand for affordable homes
These days, house rents still come on top of home purchases by a wide margin of 59%, at least in the US. The prices of residential properties are not doing anything to help, as they also speed ahead wage increase in defeating 80% of markets. For real estate markets with multi-million populations, affordable home developments might be the only solution.
Importance of local professionals
With positive real estate trends crisscrossed with negative ones, today’s investors need to have a deep understanding of any new market they wish to enter. However, to gain a proper insight and develop the appropriate marketing methods, they often need to work with established experts such as Jack Brown at Invest Islands, who can often achieve a lot more than digitally-based strategies alone.
New technologies
Never a stranger to technology, the real estate sector is expected to benefit from the developments of smart home tech, online, home selling platforms, and various apps. Building organization, design and management will include artificial intelligence, with machine learning already in use in public spaces for property design and urban planning.
Attracting buyers through amenities
Although they were once the staple for attracting new tenants, the gym and parking access don’t seem to be enough anymore. Now property owners, landlords, and even builders are competing to offer unique amenities like movie theatres and communal gardens. As a result of environmentally-savvy investors, smart homes are in demand, as well as amenities and features that add value to the properties.
Unyielding mortgage interest rates
After years of stagnation, mortgage interest rates are rising at 4.4% for 15-year mortgages and 5% for 30-year mortgages. These higher interest rates are a direct response to people’s unabating willingness to borrow and spend. While for home sellers, increased mortgage rates mean early planning to anticipate decreased offers, for buyers it means they may have to postpone their investment plans.
Political risks
The Emerging Trends Europe 2020 survey rated international and European political instability as key concerns for 81 and 70 percent of respondents respectively, with 60 percent being concerned about their national politics. While the political backdrop has been an important ‘player’ among the European property leaders, now the political issues are burdening both the economic and real estate performance, as well as business certainty.
At the turn of the year, the real estate market is a motley collection of trends, primarily marked by the rising home prices and mortgage interest rates. The sector is expected to remain solid, though, at least for the next few years, as a result of the steady financial flow. In spite of the decrease in ownership, real estate listings are surviving thanks to the Millennial buyers, as the next “generation with cash”.
