While there’s still a lot of economic uncertainty, real estate will and always be a good investment for anyone. Whether you’re a home buyer or an investor, knowing the trends in real estate is a must because it helps you make smart decisions. Who knows, what you invest in today will become breakout investments tomorrow.
The majority of the trends we’ll see in 2020 are products of the financial and political atmosphere and the effect of the shift in buyer demographics. Read on to know what to expect in the real estate sector this year.
There’s a lot of demand for safe investments, but many are coming up short. Because of this, two things are happening at the same time. Institutional investors are taking on a more conservative approach. Meanwhile, there’s also a temptation to give in to the pressure and invest anywhere, which may lead to bad bets and more uncertainty.
Rising Home Prices
According to statistics, home prices are likely to increase, similar to the trend observed last year. The previous year saw slow growth in prices at 3.3% as compared to 5% in 2018. Real estate experts predict that there will be a 2.8% increase this year.
This figure suggests that if you’re planning on getting a house this year, you have to do the math to figure out what you can afford. While it’s nice to get that dream house, you must have a realistic budget and stick to it. Don’t max out your bank account and card limit to save you from financial problems in the long term.
Declining Mortgage Interest Rates
Another trend we’ll see this year is a decline in mortgage interest rates. Last year, mortgage rates were on the decline at 4%. For this year, economics experts predict that it will stay at around 3.7% for a 30-year mortgage and 3.2% for a 15-year mortgage.
This is good news if you’re not planning on paying in cash upfront for your property purchase. It is wise to get a 15-year mortgage and calculate your payment over the life span of the loan. It’s also wise to get a postdated check for mortgage payments. Not only does it ensure that you issue your payments on time, but it will help you stick to your budget. Always remember to check your routing number when making check transactions.
Millennials Make Up the Majority
Millennials continue to make up the majority of property buyers for this year. For those unfamiliar, this is the age group that was born between 1981 to 1996. This means that a lot of them might be buying their own homes for the first time.
For property sellers, this means that you have to work on your online listing, highlight features of the location over the property size, and know the popular features of the property like a walk-in pantry or a patio.
Meanwhile, for buyers, this means that you have to know exactly what you want, hire an experienced professional to help you with your search, and give your offer a personal touch to have the edge over the others.
Because millennials and younger generations are now making real estate decisions, they’re factoring in social good in these decisions. Social good includes environmental, social, and governance. For real estate, this means that community-oriented development will become more popular in the long run. This trend also includes sustainable multifamily developments that encourage sustainability and green living.
According to real estate gurus, it looks like community-oriented spaces and development is here to stay. Expect more co-working spaces to pop up in your locations as well as urban green markets, food halls, and foodie-centric public spaces. They also say that collaborative consumption is popular with the younger generation because of its sustainability and social interaction.
The Rise of Hipsturbia
With housing prices in city centers becoming unaffordable for most, more people are now shifting to the suburbs. Experts call this phenomenon “the rise of Hipsturbia” because, aside from the increased diversity, the developments outside the big cities have a lot to offer. They’re now more walkable, and these developments favor density, retail, recreation, and access to transit.
The shift into Hipsturbia has driven new developments into these areas. One example is the rise of new apartments, eateries, and office spaces in locations connected by old railways.
Rising Need for Senior Housing
Another demographic driven trend that we’ll be seeing this 2020 is the baby boomer generation entering their retirement years. According to Curbed, the number of Americans over 80 will double in figure this year, from 6 million to 12 million. Members of this age group will now look for housing options that include active lifestyle living. For those downsizing, they will most likely opt for urban apartments. For those who’d want to stay in place, this means that there will be renovations for existing homes.
Tech in Real Estate
The real estate sector is a little behind in terms of technology. However, it’s already starting to embrace the future. In previous years, we’ve seen the adoption of smart home technology rise. Experts say that these technologies will become more integrated into the typical home with the rise of 5G. Expect to see digital assistants and security cams become more visible in the typical household.
Aside from the development of technology for the smart home, tech is also making an impact on real estate transactions. iBuyers like Zillow make property data analysis much easier to help with decision making.
In multifamily setups, technology is now becoming a consideration in buyer’s decisions. Real estate that is filled with various amenities like digital concierges will now beat rooftops and gyms.
States and Cities Pick Up the Slack
Because the rehabilitation of the roads, bridges, trains, and ports in the United States has yet to be done, states and cities are picking up the slack. They’ve now focused on improving their transit system. The improvement, in turn, will give excellent opportunities in the real estate sector by attracting investors to these up and coming locations.