2016 was a wild year for real estate, with housing prices increasing, mortgage rates decreasing, record home sales and dipping housing inventory. Looking into 2017, it seems that while some trends will likely continue (such as a continued increase in home prices), we’ll see a number of shifts in the space that anyone interested in real estate will want to pay attention to.
According to a forum on the emerging trends affecting real estate that took place at the 2016 Realtors Conference & Expo, the major issues set to impact the space in 2017 are housing affordability, demographic shifts, and e-commerce’s impact on retail spaces.
Rise in Commercial and Residential Buying
Now that millennials have taken over baby boomers as the largest generation and a growing share are now entering their mid-30s, an increasing number of them will be looking to purchase homes that they can occupy with their new families. Meanwhile, baby boomers aging into retirement will likely increase demand for commercial real estate in the form of medical and assisted living facilities.
Increased Demand
The lack of new supply coming into the residential real estate space has raised the cost of purchasing a home. As younger and older buyers are competing for the small amount of inventory available and rents continue to outpace incomes in a number of communities, aspiring homebuyers feel increasing pressure to save enough money for a down payment. With that said, as home prices have outstripped incomes, rental demand is likely to remain strong as well.
Expansion of Cities
As people prefer to live in or immediately near urban cities, the living zone of said cities is expanding. Those living in the suburbs would still like to be near walkable areas with a variety of available activities, which is making the suburbs more urban-like with a mix of office space and multi-use developments.
Shifts in Commercial Real Estate
Given the rapid rise in online shopping, major in-store retailers have adjusted by shrinking their store footprints. An emerging trend in the space revolves around ‘showroom’ space with an online component, mixing the two successful modes of commerce. Many new commercial construction projects are mixed-use, and we’re likely to see more developed in 2017 given retailers’ desire to be near walkable residential areas.
Source: National Association of Realtors