Housing Market

What Real Estate Trends Should We Watch For In 2018?

Real Estate Virtual Assistant | Tiffany Haynes | VBS Real Estate | Transaction Coordinator | Listing Coordinator | Marketing | Texas | Dallas | Houston

As the real estate market continues to evolve, new trends are emerging for 2018. Buyers will be more in control as the housing supply will finally catch up with buyer demand, according to a report by Realtor.com. Additionally, more millennials will be looking to get out of their parents’ basement and purchase a home of their own.

Real estate agents have the challenging task of changing with the market and being responsive to their clients’ needs. Whether it is a buyer looking to purchase a new house or a seller looking to get the best price for their home sale, real estate agents will need to stay up on the trends of 2018 and be ready to respond to a growing demand for real estate.

Ten members of Forbes Real Estate Council shared what trend in real estate they predict will have the biggest impact on their business in 2018. Here is what they had to say:

1. Co-living And Community-Driven Spaces

Co-living and community-driven residential will increasingly have a larger impact on the multifamily industry as it changes to reflect a new wave of renter demands and wants. Just as amenities have defined the last decade of commercial real estate development, the need for unique experiences and services will heighten competition. - Benjamin Pleat, Doorbell Inc.

2. Short-Term Rentals

The rise of the short-term rental market has created a boom in opportunity for large property owners or the single family owner. Priorities range from renting a room occasionally for extra cash to renting entire vacation homes at three to five times the local and regional market since you now can access a global community. - Susan Leger Ferraro, Peace, Love, Happiness Real Estate

3. Fractional Investing

As peer-to-peer lending and crowdfunding catch mainstream attention, folks looking for greater diversification and passive investment opportunities will engage in factional investing. The last few years have seen some extremely credible startups innovate in this space, and next year could lead to individuals moving away from sole ownership to fractional ownership via crowdfunding. - Sohin Shah, InstaLend

4. Smaller Living

Tiny apartments and mobile living will be a solution to increasing housing density in overpopulated areas. This will become more of a norm in big cities and will drive up operating income on existing apartment stock. This likely won't have a huge effect on 2018, but it will over the next decade. - Nathaniel Kunes, AppFolio Inc.

5. New Appraisal Legislation

The new tax bill may further restrict new home-buyers from entering the market. Implementation of appraisal management company regulations in 2018 will increase costs and have the greatest impact on our business. It will increase the cost to do business, which will ultimately increase the cost to the consumer. - Cindy Nasser, PCVMurcor

6. The Rise Of The Real Estate Investor

The stigma around the average real estate investor seems to have faded with the recession but also, the rise of the corporate/national real estate investor is happening as well. I see that niche becoming more competitive, recognizable and digitized in 2018. Many home owners won't think twice about entertaining an investor offer alongside considering selling with agents. -  Tracy Royce,  Royce of Real Estate

7. On-Demand Access For Renters

We often hear from renters that they are too busy to sweat the small stuff. They want immediate tour confirmations, like booking a restaurant on OpenTable, and near-immediate confirmation that they have leased, like booking a hotel. This real-time service expectation from a new generation of renters is exactly what we plan to cater to in 2018. - Anthemos Georgiades, Zumper

8. Growth Of Private And Alternative Real Estate Investments

We expect consumers will continue to invest more capital into private and alternative real estate assets, as public markets remain at record highs across all major asset classes, and comparable yield risk remains favorable to private real estate vs. higher risk bonds and equivalents. - Colin Bogar, Property Passbook


9. The Rise Of Micro Units

Rental rates have been increasing across urban areas for the last several years, and the most impacted cities have seen a rise in micro units. These well-designed rooms, as small as 200 square feet, maximize every square inch available. Places like The Panoramic in San Francisco and Yotel in New York have been the first to embrace the model, and we see this trend expanding over the next year. - Nav Athwal, RealtyShares

10. Millennial Buyers

I believe that the new buyers are millennials and we, as agents, need to become more proactive in the community to become that millennial choice. This generation has many different options for home ownership including tiny homes, investment homes and coliving situations with friends or family. It's going to be a huge learning curve and a fun adventure all around! - Kevin Taylor, Sand to City Real Estate Team

4 Buying Groups to Watch

These demographic segments are expected to have a sizable impact on real estate over the next decade. Is your brokerage ready to meet their needs?

These demographic segments are expected to have a sizable impact on real estate over the next decade. Is your brokerage ready to meet their needs?

The influencers in your market are gradually changing, and those changes could have a significant effect on your business over the next 10 years. According to a newly released report by the Urban Land Institute and Johns Burns Real Estate Consulting, the U.S. is expected to add 12.5 million net new households over the next decade (from 2016 to 2025) — nearly double the 7 million formed in the previous 10 years. That means a flood of new potential clients is on their way — and they are predicted to transform both residential and commercial markets.

The report, Demographic Strategies for Real Estate, highlights how four demographic groups in particular will be key players in the housing market into 2025: women, immigrants, retirees, and young adults.

The demographics are changing dramatically everywhere. If you don’t pay attention, your pool of clients is going to dwindle.

These four groups are expected to drive the next decade’s real estate markets, and these tips will help you help your agents prepare for them.

1. Women

Women’s buying power is strengthening as their workforce numbers rise sharply. Women now earn 58 percent of all college degrees nationwide. They earn more than their spouses 38 percent of the time. By 2025, the number of women in the workforce is expected to jump to 78 million — 8 million higher than the level in 2015.

The working woman today is different than previous generations. Forty years ago, 68 percent of women in their late 20s had both a husband and child. Today, that percentage has plunged to just 22 percent. Women may delay marriage or child-rearing to focus on their jobs first. But single women have shown they’re not afraid to step into home ownership alone. Single women accounted for 15 percent of all home purchases in 2015, while single men made up 9 percent.

Community impact: Women are expected to have a larger influence on the commercial office market. Female executives likely will have more of a say in office space selection, given their increasing dominance in the workforce. They’ll likely favor shared space and e-commuting because of the financial savings and increased flexibility. Therefore, commercial markets may see fewer square feet per employees as “companies transition to a hotel-like atmosphere where people ‘rent’ a desk for the day,” the report says.

2. Immigrants

Immigrants are expected to comprise more than half the U.S. population growth by 2023, if current trends continue. In 10 years, more than one of every seven residents will be an immigrant. Many of the immigrants coming to the U.S. are highly educated middle- and upper-class families with substantial buying power. “These consumers are vital to the economy, but common wisdom about the ways they form households, buy homes, and behave in the marketplace no longer holds,” according to the report. “Immigration has shifted from impoverished refugees walking across the border or landing via boat to affluent middle- and upper-class families fleeing their native lands after decades of amazing economic growth.”

Community impactHouseholds may get bigger. Multigenerational family living is defined as households that include two or more adult generations. Asian and Hispanic populations are more likely to live in multigenerational family households than other ethnicies. And as their numbers have increased in the housing market, so has the number of these households. Multigenerational households soared to a record 60.6 million, or 19 percent of the U.S. population, in 2014. As more people live under one roof, there may be an increase in demand for homes with two master bedrooms, separate entrances, garage conversions, or even separate outdoor spaces.

3. Retirees

Baby boomers aren’t softening their buying power into their golden years. But they’re very diverse in how they’re exercising it in retirement. By 2025, 66 million Americans will be over the age of 65. That is 38 percent more than in 2015. Young retirees’ needs and lifestyles are varied, which can create a variety of customer segmentations within this group. For example, 19 percent of 65- to 69-year-olds still work full time. Those born in the 1950s are still maintaining active lifestyles and are spending their unprecedented net worth, often on real estate.

Community impact: Retirees may help foster more mixed-use developments. A report released by the Brookings Institution found that walkable, mixed-use developments could even help reduce the effects of disabilities many retirees face as they age. More developers are looking at retirement buildings that are dense, urban, and centered near retail sites and services. Also, the rise of the sharing economy and short-term rental sites may also pave more ways for retirees on fixed-incomes to profit off their real estate. For example, sites like Craigslist and Airbnb are making it easier to rent out rooms. That said, “renting empty rooms could steal demand from hotels, apartments, homebuilders, and local municipalities who rely on hotel taxes and development fees,” the ULI report warns.

4. Young Adults

The millennials are expected to drive the majority of new household growth over the next decade, although more slowly than their predecessors at forming new households. They’ve delayed getting married and starting families. Also, high rents, student debt, and the Great Recession have been blamed for curtailing their leap into home ownership. But they are coming. The 44 million 18- to 27-year-olds born in the 1990s will lead the majority of new household growth over the next decade, ULI predicts. They are expected to create 14 million households by 2025.

Community impact: Prepare for a newly labeled type of housing to enter your community: The surban. It’s a term coined by John Burns Real Estate Consulting to describe the combination of urban in-demand traits (such as public transportation and proximity to employment) with suburban living (including quality schools, privacy, and larger home sizes). “Surban” developments are expected to rapidly grow, transforming shopping centers into areas that combine housing and retail that offer walkable, convenience, and car-free living. Municipal leaders gradually are responding with zoning changes to permit more of these developments. The report also notes another community impact from the growing millennial population is an uptick in rental housing, townhomes, and smaller homes with small to no yards.

For information on how to prepare for these groups, continue reading here

 

Q & A: Will 2017 Continue to Favor Underrepresented Groups?

Real Estate Virtual Assistant | Tiffany Haynes | VBS Real Estate | Transaction Coordinator | Listing Coordinator | Marketing | Texas | Dallas | Houston

2017: The Year of Women and Minorities

The housing ecosystem is evolving, and we're witnessing circumstances to be more favorable for underrepresented groups than previously. Will 2017 continue this progression?
 
Market
While low mortgage rates are undermined by high home prices, buying in southern metros is at times more than 50 percent cheaper than renting, according to Trulia. Buyers in the West, where high rents often remain preferable to rising home prices, face a tougher task.
 
Agents must recognize these conditions and the fact that international investment in U.S. real estate is expected to continue. In the first half of this year, Asian investors invested $4.02 billion in New York real estate and $1.4 billion in San Francisco property alone—the top two most desired American destinations for their capital.
 
Women and Minorities
Single women accounted for 15 percent of homebuyers in 2015, compared to 9 percent single men. The desire to own a home, coupled with professional advancements, make women a formidable source of purchasing power; in fields like civil engineering, women increased 977 percent from 1970 to 2010, and the percentage of married couples where the woman earns at least $30,000 more than the man rose 3 percent between 2000 and 2015.
 
According to the U.S. Census Bureau, from 2014 to 2015, the Hispanic poverty level declined from 23.6 to 21.4 percent, and the median annual income of Hispanic-origin households rose 6.1 percent, from $42,540 to $45,148. Similarly, the poverty level of black households decreased to 24.1 percent from 26.2, and their median annual income increased 4.1 percent, from $35,439 to $36,898. As their incomes rise, minorities will progress out of poverty, and their presence among homebuyers will grow.
 
In addition to their personal advancements, women and minority homebuyers will be assisted by government policies in 2017.
 
Recently, the Federal Housing Finance Agency (FHFA) issued a Notice of Proposed Rulemaking (NPRM) on proposed amendments to its Minority and Women Inclusion regulations. Among proposed changes, the amendments would:

  • Encourage the regulated entities to expand contracting opportunities for minorities, women, and individuals with disabilities through subcontracting arrangements; and
  • Require the regulated entities to amend their policies on equal opportunity in employment and contracting by adding sexual orientation, gender identity and status as a parent to the list of protected classifications. 

In October, Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), stated that redlining would be a priority for the Bureau in the coming year. By focusing on redlining, the Bureau is demonstrating that discriminatory practices remain a large issue, behooving the housing ecosystem to eradicate them and allow consumers to exercise their buying power.
 
Despite high home prices, 2017 is expected to observe noteworthy buying activity from several groups. Underrepresented groups will receive the attention and help of impending government policies, which will create a clearer path to homeownership.
 
A growing market of capable buyers will help strengthen the housing ecosystem and economy. These buyers are looking for the help of experienced professionals. Will you be ready for the buyers of 2017?

Q & A: How Are Millennials Affecting the Real Estate Market?

Real Estate Virtual Assistant | Tiffany Haynes | VBS Real Estate | Transaction Coordinator | Listing Coordinator | Marketing | Texas | Dallas | Houston

If you're under the age of 35, everything you know about owning a home could be wrong; but it's not your fault. Parents of millennial children have taught them what was financially sound when they were the same age — go to college, get married, buy a home and have children; the formula for the American dream. The American Dream is still real for many, but the details are murkier in 2016.Here are some of the reasons why the nation's youngest buyers are having an affect on the housing market:

1. Millennials Love Mobility

Economists are calling millennials the "job-hopping generation," because they are more likely than previous generations to frequently change jobs, even if it requires moving. Job loyalty is on the fall and millennial workers are free to take their 401(k) accounts elsewhere. Because the next job, and next city, is always on the horizon, more millennials are opting for short-term apartment leases, which allow for freedom of mobility.

2. Millennials Love Cities

Millennials are more likely to buy their first home in the suburbs, not the city. Even outside of price-inflated cities like New York and San Francisco, urban housing costs are skyrocketing and forcing new homeowners outside the city limits. However, renting — still on the rise — is more manageable and gives young people the option to keep living in the city.

3. Millennials Love Incentives

The 2008 recession was a tragedy for homeowners who bought under inflated prices, but a silver lining for anyone buying after the fact. To help boost the economy and the new housing market, the IRS offered a hefty tax credit to first-time buyers until 2011. Just like a tax credit for electric cars, this was just the bump young people needed to buy homes after the biggest recession in nearly 70 years.

But now that the Federal Reserve is expected to raise interest rates for the first time since the recession, that boost in young home ownership could see a sharp turn in the other direction.

4. Millennials Do Not Love Student Loans

Perhaps the biggest hurdle standing in the way of homeownership, student loans account for the largest debt in the United States and are especially harsh on younger people. The more you owe in student loans, the less likely you are to buy a house.