TOP 4 ISSUES EXPECTED TO AFFECT REAL ESTATE IN 2018
TOP IMPACT ISSUES - REAL ESTATE 2018
As we prepare to wrap up first quarter 2018, I thought it would be fun to explore what issues are projected to impact the real estate market for the rest of 2018. Every year the Counselors of Real Estate (CRE), an invitation-only professional association of industry-leading real estate advisors, collaborate to extensively exam issues and trends that are expected to impact the Real Estate market in the coming year. They recently released their annual list of issues as published in the Commercial Connection Fall 2017 issue. Here are a few of the top issues included on their list.
1. GLOBAL UNCERTAINTY - POLITICS
It should be of no surprise that global uncertainty and the current political polarization that continues to divide our nation is the number one concern of Real Estate professionals as it relates to the potential “negative” impact that such a politically volatile climate could have on the Real Estate market in the coming year. This climate is impacting decision-making at every level of government and the business community. Recent elections in the US and other countries point to resurging nationalism and it is testing long-standing international relationships around the globe. The impact of such a volatile climate effects trade, travel, immigration, cross-border investing, infrastructure, affordable housing, local and state pension funds, and education and in turn have an immediate and measurable impact on real estate.
As with every list impacting real estate, today's infrastructure investment is a major concern as it relates to the impact on the real estate market going into 2018 as well as many years to come. All forms of infrastructure including roads, bridges, mass transit, rail lines, pipelines etc. have become more urgent and pronounced. The current administration is moving to limit Federal Government investments in infrastructure improvements placing a huge burden on private industry and local and state governments to fill in the gap. This presents a unique opportunity for the private sector to direct significant funds to infrastructure projects which will help create jobs, stimulate the local economies and have a very positive impact on both commercial and residential real estate in the coming year.
3. TECHNOLOGY BOOM
The CRE also points to the Technology Boom which is revolutionizing real estate as it changes the way real estate is bought, sold and managed. Artificial Intelligence (AI) has accelerated automation in the workplace and over the next 15 years, it is expected to displace as much as 3.5% of the current workforce every year for the next 15 years which will directly impact nearly half of the current workforce. This will have a negative effect on the unemployment rate and strain our education system and overwhelm our technical schools because the displaced workforce will need to be retrained as they are forced to change professions and their careers.
Technology is also disrupting traditional retail models and the way goods and services are distributed. Online consumption drives warehouse demands up and retail space down. As CRE, Peter C. Burley points out, this by no means will cause a “Retail Apocalypse” but the retail landscape is definitely changing which directly impacts commercial space planning and residential planning and investing. As retailers find fresh new ways to refine inventories, distribution methods, and fulfillment models, the retail market will not only survive but may even prosper.
4. GENERATIONAL DIFFERENCES
The generational difference will also continue to impact the real estate market in 2018. As a real estate professional, it is our job to understand the needs and wants and what motivates the different generations. Boomers, Gen Xers, and Millennials are all looking for different real estate options. The boomers are transitioning to one story homes with open floor plans and lots of retirement activities and amenities as well as assisted living and medical facilities. During the great recession, Gen Xers found themselves sleeping on the sofa and living in their parent’s basement. In this post-recession boom, Gen Xers generally have a lot of credit card debt, student loans, and car notes but are now looking to buy real estate in the suburbs motivated mainly by job relocation opportunities and growing families. The Millennials, on the other hand, are looking for real estate in the new urbanization high-density landscapes and developments that allow them to live, work and play in the same immediate community. These communities are generally located near mass transit stations with open parks, walking paths and bike trails that reduce the need for cars and long commutes to work.
As you can see there are a number of issues expected to impact the real estate market in 2018 making it all the more important that you hire an experienced realtor anytime you are looking to buy or sell real estate.