With the economy fluctuating, more investors turn to the real estate market because of its resilience. Yet, to get the most out of the real estate market, an investor needs to spot trends before they become apparent to everyone. Over the next one to three years, the real estate market is likely to see a lot of change, from how realtors do business to how people buy houses. Even rental properties are likely to be affected by these trends.
But what are these elusive business opportunities that you should be looking 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, people want more livable space. We have seen a huge increase in demand for residents moving into single-family rental property to gain more indoor and outdoor space attached to their unit, and many are applying sight unseen. With more activities taking place inside the home, homes need to now 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
As India returns to normalcy, we are witnessing a shift to agile and flexible 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
Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?
3. Buildings Enhancing Health And Well-Being
One thing to keep an eye on is how the built environment impacts your health and wellbeing. Designing and constructing in ways that improve or enhance someone’s overall health will be something consumers and end users will gravitate toward. – 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. In the coming years, we expect to see residents flock to apartment properties that feature amenities like dog parks, gardening areas and outdoor theaters. – Salvador Garcia, MAS Development Group
5. More People Migrating To The Suburbs
Remote work was already growing in popularity before the pandemic. Now, as Covid-19 causes remote workers to make up an even larger share of the workforce, we’ll see the migration away from major cities to more affordable, spacious hubs like the suburbs. Additionally, millennials’ desire to buy or rent single-family residences will remain a growing trend in the real estate market. – Miriam Moore, ServiceLink
6. Growing Demand For Experienced Agents
Today, over 50% of transactions are facilitated by inexperienced part-time agents. As clients grow more savvy, average will not be enough. People will prefer experienced agents that deliver best-in-class results. As such, we’ll see part-time agents facilitate fewer transactions, while high-performing agents continue organizing into teams that facilitate a much larger share of total transactions. – Guy Gal, Side Real Estate
7. Independent Brokerages Will Disappear
I believe the small independent brokerages will no longer be around, though brokerages backed by corporate or venture capitalists will survive. Technology is increasingly important and to be at the forefront of tech and have all necessary resources to compete in the market, I think brokerages will need to be backed by larger entities. – Cyrus Mohseni, The Keystone Team
8. Growing Inflation Rates
One trend that will impact all real estate markets over the next one to three years will be the Federal Reserves’ recent decision to allow the nation’s inflation rate to move above their 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
I believe that the largest impact on real estate will be created by rising interest rates soon. There is no way that banks can continue to lend at 2% interest. It’s not feasible. At some point, reality will take over and 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, I predict that there will be heavier taxation for principal residences. There will likely be a slow and steady increase in the Canadian market due to low interest rates, immigration and more job opportunities. – 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. We’re seeing this already, and I expect this trend to continue over the next few years. – 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 prior to 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 in 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. I see 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. For operators, deposits and their alternatives are difficult to manage and don’t provide adequate financial protection. – Reichen Kuhl, LeaseLock, Inc.