5 Must-Know Real Estate Trends

Hey, there’s been some positive news for economic growth of late! Reports indicate that real estate is rebounding in many areas, buoyed by low(ish) interest rates, job growth and other positive stimulus.

It definitely helps you to narrow down your marketing and target audiences if you understand some of the trends going on. While they may not be the same for every area, you can pick and choose which ones apply…

#1. Sustainable Buildings

Green and sustainable building construction remains one of the fastest growing industries in the U.S. market. There is growing awareness of the effects of climate change, conservation of resources and the need to build resilient homes able to withstand any natural disasters (as brought to light by incidents such as Hurricane Katrina).

For example, an Alabama company recently celebrated building its one thousandth home to the fortified home gold standard. This effort helps to reduce insurance premiums for high winds and build houses that are more resilient against events such as strong winds, wildfires and hailstorms.

There is also growing demand to understand what materials have been used in building as well as the methods. Real estate agents can find themselves being asked a range of questions related to how sustainable a building really is as people feel more responsible for doing their part.

[tweetthis] Sustainable building is one of the fastest growing industries in the U.S. [/tweetthis]

Water Conservation

Severe droughts, particularly across California and other parts of the Southwest have raised awareness among buyers of water conservation issues. They have either experienced water shortages and restrictions or have seen stories such as the California town surviving without water.

This brings demand for water-conserving features such as low-flow toilets, grey-water recycling and methods to collect rainwater. What does this mean for real estate agencies? Homes with these kinds of features could have a good selling point to talk up in your marketing.

Reclaimed Wood

While perhaps it is an item considered “trendy,” the awareness of sustainability issues has boosted demand for recycled materials in homes, including reclaimed wood flooring. Agents should be aware that people are more often questioning the origin of materials such as flooring, mirroring trends we see happening with beauty products and food.

#2. Affordable/Smaller Homes

Is the “McMansion” dream dead? While there is still demand for larger houses, growing awareness of environmental footprint, cost, debt and use of resources has drummed up the still-growing trend for smaller homes, built to be affordable.

Tiny homes are one growing manifestation of this trend, but there is also more interest in homes that are less than 1000 square feet than there used to be. Smaller houses offer lower use of electricity, low to no debt and a smaller impact on the environment.

With more than 50% of 18 – 34 year olds renting because they can’t afford a housing down-payment, smaller homes are popular in this age group, as well as growing interest in retiree age groups.

Source: Restoring Simple

There is also a growing market for the “tiny house on wheels” for those who prefer to be more mobile.

#3. Generational Influences

We recently wrote about Gen Y, their preferences and how they are now the largest group of homebuyers. This generation continues to have improving financial conditions and the desire to move into the housing market—most of them for the first time.

Agents need to be placing more emphasis on growing relationships with this generation and appealing to their technological preferences, such as through the internet.

Otherwise, many Gen Xers have recovered from the economic depressions of the last few years and are starting to look to move into better neighborhoods, while older Boomers are looking to retirement and possible downsizing (as above). This is releasing suburban housing stock onto the market, which millennials looking for family homes can buy. Predictions hold that it is a good year to be selling.

#4. Rents Continue To Rise

There has been a growing crisis of affordability when it comes to rents, to the point that in many areas, it is true that it would cost less to own and pay a mortgage.

A report in Newsweek showed that by 2025, nearly 15 million U.S. households are expected to be devoting more than half of their incomes to rent. Basically, income growth has not outpaced increases in rent for most areas and is not expected to.

Figures indicate that in more than 75% of the U.S. it would be more affordable to buy than rent, so those with suitable credit scores and savings are more likely to seek relief from high rents by buying. At the same time as accelerating rents, home prices tend to be moderating in many areas, making buying a more attractive proposition.

This is a trend to keep an eye on as it does not look good for renters in the future unless something is done to construct more affordable housing. If your agency deals with rentals, then you will need to be on top of developments for your clients. As pointed out in the Newsweek article, it will take a collective effort to address the problem.

#5. Downtown Revival

City centers all over have been undergoing transformations to make them closer to 24 hour destinations. At the same time, PWC’s Emerging Real Estate Trends report finds that:

“The office sector has been benefiting from the strengthening employment numbers in this maturing recovery. Employment is up by more than 2.9 million year-over year, as it has been since late 2014, and the July growth rate for jobs was a solid 2.1 percent.

Job gains have now spread to the vast majority of metro areas, with New York/Northern New Jersey (168,900), Los Angeles (152,000), and Dallas/Fort Worth (117,800) leading in absolute change, and only a few metro areas registering moderate decreases.
With office-using jobs, as tallied by a national brokerage firm, accounting for 39 percent of the employment gain, both central business district (CBD) and suburban office absorption has been brisk, bringing vacancy down 90 basis points and rents up 2.9 percent year-over-year. The outlook for the year ahead is “more of the same.”

This renaissance of downtown areas to be more trendy as well as more economically thriving will see more interest in purchases near downtown areas, both to be close to the action and close to work. Agents should look for these trends in their local areas—it could be attractive to buyers who would have otherwise gone to the suburbs.

Final Thoughts

Trends in real estate have seen a growing move towards environmental stewardship and affordability. People are more aware of impact on the environment, as well as carrying fresh memories of the implications of large debt during a financial crisis.

At the same time, generational moves are coming into play and economic recovery has seen more done to uplift downtown markets.

Renters have a more grim outlook in most areas, with sky-high rental prices predicted to grow. This could be a driver for more new home buyers to enter the market…

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