These are the trends that will dominate real estate in 2019
Tremendous opportunities lie ahead for real estate professionals — but also risks, slowdowns, and potentially difficult transitions.
That’s according to the 2019 Emerging Trends in Real Estate report released this month by the Urban Land Institute. The report, a joint effort with PwC, is based on interviews and survey responses from thousands of respondents from the real estate industry. It’s a wide-ranging look at the state of the industry, but below are some of the most significant trends to watch out for in 2019 and beyond.
The market may reach a “plateau,” but it won’t collapse
Probably the most significant trend the report identifies is the likely cooling of the market — a trend that has been explored by other sources as well. Though most of the people interviewed for the report didn’t think a correction was automatically on the horizon, the prevailing sentiment was that the real estate market is “coming off a peak” and expectations are reaching a “plateau.”
This trend is tied to an expected general slowing of economic growth in the US, which “presents a challenge to real estate markets.” The result may be increased risk around new projects, and an interest among those in the industry to “seek the most productive use” of existing assets.
Whatever happens, surviving will mean getting creative. The report concludes that “success will elude those markets remaining passive or stubbornly applying 20th-century approaches” to modern problems.
“Success will emerge from those markets that tackle their problems innovatively,” it adds.
Affordability is straining the market
Unsurprisingly to anyone living in a major city, affordability issues will shape real estate in the near future. The report notes that, nationwide, “rising levels of unaffordability are largely a function of underproduction at all price levels except for luxury housing, both ownership and rental.”
The high cost of housing has far-reaching effects. It is driving homelessness across the US. Half of all renters are paying more than 30 percent of their income on housing. And 12 million people are spending more than 50 percent of their income to keep a roof over their heads.
To solve this problem the US needs to build 4.6 million additional rental housing units by 2030. That adds up to 325,000 units per year. That’s doable, according to the report, though so far “deliveries are skewed toward upper-end product.”
Millennials are interested in the suburbs
Headlines have long touted millennials’ tendency to live in urban centers, and that has indeed happened. But today, at least some of the more than 80 million people who are now in their 20s and 30s “could be turning their attention to the suburbs.”
This is a particularly important trend right now because millennials are currently starting families and settling down — meaning they could have a huge impact on the housing market and everyone who works in it.
“The traditional attractions of the suburbs — larger homes, good schools and lots of green space — have not changed,” the report adds.
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