15 Trends that could impact the Real Estate Market over the next year.
With the economy fluctuating, it’s more important than ever for a real estate developer or investor to be able to spot trends before they become apparent to everyone else. Over the next one to three years, developers and investors have important real estate trends to look out for. Fifteen members of Forbes Real Estate Council delve into what these trends are and how any investor in the field can make the most of them in the coming years.
1. Increased Demand For More Livable Space
Due to the pandemic, we have seen a huge increase in demand for residents moving into a single-family rental property to gain more indoor and outdoor space attached to their unit. With more activities inside the home, homes need to have space for living, entertainment, career/job work, working out, school, and more. - Karen Hatcher, Sovereign Realty & Management LLC
2. A Significant Shift To Agile Workplaces
Given the uncertainty around the economy and pandemic, large tenants are looking for shorter leases and scalable managed spaces. Demand for fully outsourced, customized offices is here to stay. Occupiers will reduce dependence on a single headquartered building, opting for shorter commitments and lower capital expenditure. - Tushar Mittal, Studiokon Ventures Pvt ltd
3. Buildings Enhancing Health And Well-Being
One thing to keep an eye on is the design and construction of buildings, will have to support the consumer’s overall health and well-being. End users will gravitate toward builders that keep health and the environment as a top priority. - Debra Wyatte, Cecilian Partners
4. More Focus On Outdoor Amenities
With people spending more time at home, outdoor amenities have never been more important. Buildings near parks have always been in demand, and properties that provide park-like settings give renters greater convenience. We expect to see residents flock to apartment properties that feature amenities like dog parks, gardening areas, and outdoor theaters in the coming years. New developments will have to include large backyards and/or community parks nearby. - Salvador Garcia, MAS Development Group
5. More People Migrating To The Suburbs
Remote work was already growing in popularity before the pandemic, now, post Covid-19 large swaths of the workforce will continue to work remotely or from home. Remote work will lead to the migration away from major cities to more affordable, spacious hubs like the suburbs. - Miriam Moore, ServiceLink
6. Growing Demand For Experienced Agents
In today's real estate market over 50% of transactions are facilitated by inexperienced part-time agents. As the market continues to heat up consumers will prefer experienced agents that deliver best-in-class results. Guy Gal, Side Real Estate
7. Independent Brokerages Will Disappear
Larger Corporate real estate brokerage firms are taking over. The small independent brokerages will become a thing of the past. Technology is increasingly important and a necessary resource to compete in the market, - Cyrus Mohseni, The Keystone Team
8. Growing Inflation Rates
The Federal Reserve's recent decision to allow the nation's inflation rate to move above its benchmark of 2% for the foreseeable future. This shift in policy will artificially suppress interest rates on real estate debt, which in turn stabilizes and inflates existing asset prices as investors search for yield. - Andrew Schena, Capital Equity Partners, LLC
9. Rising Interest Rates
The largest impact on real estate will be created by rising interest rates. There is no way that banks can continue to lend at 2% interest. It's not feasible. At some point, we'll go back to more historic interest rates. As soon as that happens, buyers will have a harder time securing financing, and home sales will slow down. - Andrew Fortune, Great Colorado Homes
10. Heavier Taxation For Principal Residences
Over the next one to three years, there will be heavier taxation for principal residences. - Morgan Browne, Oakwyn Realty Ltd.
11. Growing Number Of Homeowners
Lower interest rates combined with the need for some stability will push more people into homeownership. - John Kobierowski, ABI Multifamily
12. Increase In Number Of Defaults
There's likely to be an increase in the number of defaults and foreclosures over the next few years due to the pandemic and the economic damage it's causing. While it's unlikely that we'll see a repeat of the massive wave of foreclosures we saw during the Great Recession, it wouldn't be a surprise to see the number of homes in foreclosure double from where we were before Covid-19. - Rick Sharga, RealtyTrac
13. Eviction Issues Taking Up More Room
I believe that evictions are one thing that will have a huge impact on the real estate market over the next few years. If landlords can't evict, it has the potential of becoming similar to the short-sale strategy for investors we saw in 2010-2013 or so. Investors who can target homes where tenants can't be evicted have the potential to do really well as long as they factor in a nonpaying tenant. - Bill Allen, 7 Figure Flipping
14. Exchange Of Wealth Between Ownership
I foresee a large exchange of wealth between ownership, especially in the multifamily sector. There are opportunities for new multifamily investors entering the field, and there was already a shortage of affordable, quality housing. There will be a shift happening toward enabling developers to build more housing in the suburbs in particular two-, three- and four-bedroom apartments versus studios and one-bedrooms. - Pam Scamardo, TPK Properties LLC
15. Rise Of Alternative Solutions To Security Deposits
Apartment operators will replace security deposits and deposit alternatives like surety bonds in favor of solutions that deliver more affordability to renters and financial protection to operators. Americans today live paycheck-to-paycheck, and deposits are too expensive. - Reichen Kuhl, LeaseLock, Inc.