Article Published by: Forbes
This year has been one of twists and turns for the real estate market. As with every real estate year, the market can shift in an instant. For this reason, real estate professionals need to keep their eyes open for the next up-and-coming trends to hit the market and cause a stir.
Knowing in advance what to expect in terms of market trends for the real estate industry will not only give you an edge over your competition, but can help you serve your customers better. You’ll be ready and able to implement, react to or inform about the ways the market shifting for the rest of the year — both good or bad.
Fifteen members of Forbes Real Estate Council share what real estate trends or market shifts they have been most surprised to see so far in 2018, from blockchain advancements to the return of co-ops, rising home prices and more.
1. Technology Advancements
The advancement of technological innovation in the real estate industry has been changing rapidly and all agents should adapt to this to maximize exposure for their listings. Companies like Redfin, Zillow, Trulia and Homesnap have been changing the way sellers and buyers perceive the market and it is crucial for agents to quickly adapt to this new reality. – Alex Chieng, A & L Real Estate Team
Not to belabor the already highly-trending topic of blockchain changing the world, but this is the reality of our industry. Blockchain-based applications are changing the way buyers, sellers and investors interact with each other and the properties they have interests in. Welcome to an new world of unleashed liquidity, transparency and disintermediation. The real estate world is rapidly changing and we must do so too, or we will fall by the wayside. – Garratt Hasenstab, The Mountain Life Companies™
3. Return Of The Co-Ops
For the past several years in Manhattan, we’ve seen the downtown new development condo market take a big bite out of the co-op resale market. Now that there are so many new (and more expensive) projects, we’re seeing buyers actually return uptown to purchase co-ops because the prices are more moderate in comparison. What hasn’t changed is that some of the boards remain difficult to pass. – Elizabeth Ann Stribling-Kivlan, stribling.com
4. Home Prices Still Rising
The NYC real estate market indicates that home prices might rise more slowly in the months ahead. During the years 2012-2015, we saw 12%-15% growth. We didn’t have any surprises this year. Average home price growth over the last few decades is somewhere between 5% and 10% per year. So, perhaps what we are seeing here is a normalization within the Manhattan real estate market. – Elliot Bogod, Broadway Realty
5. Softening Cap Rates
Fully stabilized, non-value-add properties have softening cap rates — as much as 25 basis points. This is due to flatter rent projections, volatile interest rates, and, in Cook County, IL, rising property taxes. – Lee Kiser, Kiser Group
6. Continued Dive In Retail Assets
We all know online sales are killing malls, but we’ve seen few attempts at adaptive reuse. Many of these struggling retail locations have excellent economics for multifamily redevelopment. I’m shocked we haven’t seen more mall-to-multifamily conversions. – Marc Rutzen, Enodo Inc
7. Millennials Buying Homes
I’ve seen article after article saying millennials do not want to buy a home or cannot afford it, yet homeownership for this age group is on the rise. Fortunately, this age group is still a significant portion of the luxury rental market, and the baby boomers who just sold their houses are an increasing renter base. – Susan Tjarksen, KIG CRE LLC
8. Steady Stream Of New Construction
The top trend I’ve seen so far has been a steady stream of new construction, which is keeping rent prices mostly in check for 2018. A stable pipeline of new buildings means we’ll see the impact of lower rent growth but still above long-term averages when it comes to rent across the U.S. – Nathaniel Kunes, AppFolio Inc.
9. Low Available Inventory
The drought of available inventory has been the most surprising trend, by far. Whether the underlying reasons are demographic, economic, regulatory (i.e., zoning) or a combination thereof, we just aren’t seeing as many homes hit the market as we should. Agents have to do a better job in prompting inventory and explaining the current seller’s market to homeowners. – Ari Afshar, Compass
10. Social Community Management
A clear trend that has emerged is the importance of online presence and branding. Real-time management of your online presence has become even more important than predicted and can impact your business if it isn’t diligently managed. So, too, is the influence of Gen Z in the marketplace. We have already seen their influence in how real estate is designed and marketed, and this will only grow. – Diane Batayeh, Village Green
11. Lack Of Transparency
What surprises me is the overwhelming lack of transparency and hidden agendas of the industry. We have an abundance of technology that could serve consumers in extraordinary ways, but the old guard remains steadfast in their fight to protect themselves. – Joshua Hunt, TRELORA
12. Texas Exploding With Investment Opportunities
I might be biased, being born and raised in Texas, but as a licensed agent/broker since 1996, I can confidently say that the growth all over the state is unbelievable. Regardless of the other markets in the U.S., Texas is in this bubble of growth with many large corporate headquarters relocating here, the oil/gas industry growth, etc. It’s a great time to be in real estate here. As they say, ”Everything is bigger in Texas,” and I have to agree. – Angela Yaun, Day Realty Group
13. Profit Taking In Affluent Markets
One of the trends that we have seen is profit taking by investors and homeowners in several of the key markets we follow. These listings have usually started 15-20% above market and slowly work themselves back, seeking an elevated pricing floor. What we have yet to learn is whether this profit taking is working to establish a new pricing floor for the overall market. – Blake Plumley, Capital Pursuits LLC
14. Visual Marketing Trends Soaring
We are seeing a huge uptick in agents recognizing the value in using professionals for all their visual marketing needs — virtual staging, drone video and photography, virtual tours, interactive floor plans and more. Hiring the pros to help will continue to be less of a “nice to have” and more of a “must have” for agents, homeowners and home seekers alike. – Brian Balduf, VHT Studios
15. Rise Of The Single-Family Rental Asset Class
A total of 3.6 million single-family rental homes (SFR) have been added from 2006-2016. The SFR industry has risen to the challenge to escape a “mom-and-pop” dominated market. As the demand from more sophisticated renters who choose not to rent increases, so does the demand from the sophisticated investor requiring a higher level of service. The institutionalization of the asset class is real. – Noel Christopher, Renters Warehouse