Ten Real Estate Trends for 2017
Despite a sense of security the real estate market has been performing well this year. From recent Brexit aftermath to the United States presidential election, predictions have been difficult to forecast. Despite all of this, the nation has proved to be opportune for investing based on activity that we have seen. The Urban Land Institute’s annual Emerging Trends in Real Estate Report which was recently released shows a more favorable outlook compared to other global locations.
Below is a list of the subjects that analysts from PriceWaterhouseCoopers and the Urban Land Institute claim will help shape the real estate market in the upcoming years.
A gentler real estate market
Having recovered from a time of economic downturn with foreclosures we have entered into somewhat of a calm from the storm. This cycle has reached a mature phase and shows to remain level. GDP is at a low but steady 2% per year so the Federal Reserve will not want to consider raising interest rates on a drastic level. Financing is still difficult for construction which has led to signs of potential slowdown for developments. This stage can be a time of uncertainty in the economic cycle for developers where anticipation for a bigger slowdown increases.
Developers are looking to gear their projects to be more of multi-use and flexible. As one investor puts it is “Jobs are no longer careers, and millennials are not yet looking for the commitment of owning a home. They are footloose in the job market, and footloose as to roots in the community.”
Transformation of location
Namely in urban locations, the “live/work/play” theme has been a common trend that gives back to the community. Developments that are situated in downtown areas are helping fuel the economy by providing growth opportunities in underdeveloped neighborhoods.
The entrepreneur developer
ULI researchers suggest that now is a great time for experimentation and potential growth for these entrepreneur developers. Without the higher profit expectations of large firms, smaller companies might afford an opportunity to penetrate underdeveloped areas as they can sometimes be more flexible in their approach.
Retirement, clampdown on immigration and a lack of project managers have all played a role in the shortage of skilled laborers. With strong demand and shortage of supply costs have risen which has forced many developers to build high end product to recapture their expenses.
Housing markets across the United States for middle-income households are becoming “housing stressed.” Home prices are escalating at a faster pace than incomes while homebuilders are not adding any mid-priced options. Population growth, land and building expenses as well as wages not increasing as quickly suggests this problem will not be solved very soon. Some cities are contemplating zoning policies as well as rent control options to help address these issues.
Barriers of entry
Urban development and walkability has created some income inequality in cities. The report suggests “exclusionary forces are equally alive in suburbs and cities.” This cycle that stems from cities has carried out to the suburbs. Demands are on the rise particularly among millennials for things like walkability, transit as well as density. Inclusivity rather than exclusivity is outweighing as a desirable selling point.
Tech savvy cities
Technology is playing an important role in the popularity of cities. Items like increasing energy efficiency, building operations and offering things like networked transportation and online parking availability all are hot subjects. The result can influence cities to be more attractive to investors while offering more jobs at the same time.
Virtual reality is becoming a popular part of the marketing process when selling real estate. It provides an element of reality prior before a product is delivered. This technology could potentially become a part of the construction industry as well. Analysts feel that there could be $2.6 billion in real estate applications by the year 2025.
Blockchain, which is an encrypted digital data technology behind Bitcoin, the virtual currency, may be a potential solution for banks. This technology offers a high level of security and encryption. Depending on how it develops and how mainstream it may become, it could potentially become a part of real estate transactions.