What will change about buying and selling homes within the next year, two years, or five? Predicting the future of any industry isn’t easy. Fortunately, real estate generally offers more accessible and reliable data than other industries to use when making forecasts. That means making reasonable predictions about the not-so-distant future isn’t a complete shot in the dark. By taking what we know from the U.S. real estate industry’s long history, we can factor old data against recent trends and technologies. We can use that information to give educated opinions about how the future of home buying and selling might soon unfold.
With that said, here are some of our predictions about what the future of real estate might look like:
In any discussion of home-buying trends, we must look at one of the most talked-about age demographics in real estate: the millennial generation. Conversations surrounding millennial homebuyers usually involve some mention of their general reluctance to buy a first home.
However, recent polls and home sales figures point to a changing tide. Millennials seem to be settling down. In fact, over 65% of millennials say they plan to purchase their first home within the next 5 years.
With young families and professionals setting real estate buying goals for the near future, we may quickly witness a corresponding surge in home purchases.
Since the average millennial has tended to rent for more years than previous generations, many developers have constructed apartments to include higher-end comforts and amenities that satisfy their older, higher-paying market.
These all-inclusive apartments may influence many of the expectations that millennials have about their first home. This could result in a competitive market for small homes that make up for space with newer amenities and easier access to downtown areas.
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When many think about the impact of modern technology on old industries, often they think of the industry-changing technologies like Uber turning the taxicab industry upside down or Amazon’s incredible impact on publishing and book sales.
It’s worth remembering, however, that while disruptive technologies like these are possible, industry-specific technology usually evolves within the industry itself as opposed to overhauling it from the outside. We can guess that the technologies we see today will improve over time, but that those improvements won’t necessarily transform the industry as a whole in the short-term.
That said, real estate technology is changing some of the ways people buy and sell their homes. There are several startups that are improving 3D imaging to produce lifelike digital walkthroughs of yet to be developed homes. This software will likely change the way people design homes, allowing architects to give families a digital tour of their homes before construction even begins. It’ll be easier than ever to play around with the features, colors, and options available to them.
Technologies like the one above will become more common. Real estate, like so many other industries, will be optimized every year to make things simpler for buyers, sellers, agents, and developers. This subtle type includes websites that allow people to vet prospective real estate agents or firms by reading online reviews.
Modern consumers increasingly trust what online reviews say about businesses, which means the most honest and helpful agents and firms are more likely to stand out from the rest. This is already putting scams at a significant disadvantage. In summary: Online reviews will continue to matter… a lot.
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The history of property values in the U.S. offers a strong case for expecting long-term real estate appreciation. Year to year growth may fluctuate, but the larger and longer real estate trend consistently rewards most patient homeowners.
In other words, the national real estate market will likely do what it has done for a long time: offer a safe long-term investment.
Now let’s talk about elements of real estate investment that I believe will change in the short term. Two significant predictions come to mind: vacation rentals and residential redevelopment.
Vacation Rentals: As mentioned before, most technologies don’t change their industries overnight. However, the vacation rental industry is one of the few industries undergoing such a shift. I’m talking about AirBnb, the decade-old company that opened the door for homeowners (and even tenants) to earn money in the vacation rental market. What used to be an industry exclusively run by hotels and select waterfront homes, has come calling, demanding an outsize share of what is otherwise just the everyday housing market.
Investors will increasingly plan for vacation rentals. The number of people intentionally buying homes to participate in the vacation rental market will grow, resulting in innovations that blend the best features of homes with the best features of hotels. As the market becomes more competitive, investors in major cities will be forced to find creative design techniques that make their properties stand out.
Residential Redevelopment: The house-flipping industry has seen a rapid surge of active investors. This means that the margin between the purchase cost and resale value of flipped homes may continue to dwindle as a growing number of interested investors drive up the cost of the highest bid.
Savvy house flippers may find it more challenging to buy investment properties that still offer enough margin to provide necessary repairs and also turn a substantive profit. In this way, the skill to find off-market purchases will increasingly distinguish the most successful redevelopers from the investors who solely find their properties at auction.
There are many additional categories we could have included in our list. Our selection by no means covers every aspect of our industry. We hope that this post inspires you to dream big about your real estate plans. At the end of the day, we believe the future of real estate is bright, especially if you’re buying in Northern Michigan.
The future holds endless possibilities about where people will buy homes, what the next trend will be, and how the homebuying process will evolve. One thing we know: buying a home is a momentous accomplishment that we want to help you achieve.
I’d like to help you find the right price and the right time to make your next move a successful one. Send me a message or give me a call at 231.459.3179 to learn more today.