Here's what real estate agents are predicting for 2020 (and beyond)
December 26, 2019 | inman
There’s something about a nice round number that puts people in the mood to assess the passage of time, the changes that have occurred and the ones on the horizon. Now, on the cusp of 2020, we’re looking back at where we thought we’d be by now and asking agents and brokers for their predictions for the next ten years.
A look back at 2010 predictions
Ten years ago, we ran an editorial project called 2020 Re-Envision: The Future of Real Estate Brokerage. Here were some of best predictions that came out of those surveys, and a few that didn’t quite measure up.
1. Fee-based compensation model. In 2010, we thought that most real estate professionals would be working on an à la carte, fee-based compensation model. More than half of those surveyed predicted that competition and online services would drive down commissions and, eventually, do away with them altogether in favor of flat fees and standard rates.
2. Technology changes. Most agents were focused on the role that technology would play — for better and for worse — in driving the real estate industry. The technology they thought would be most game-changing? 3-D and virtual and augmented reality, followed by improved statistics and value estimates as well as social networking platforms.
3. Less offices, more service. This prescient article accurately predicted the decline of commercial offices in favor of co-working and flexible office space, as well as the importance of content creation as a marketing tool. In addition, it spells out the transformation from traditional real estate brokerage and services to a “knowledge/information services firm.”
4. No more agents. This article went further, with a vision of a fully automated future where the real estate agent has been entirely replaced. The emphasis here is on how important it is to focus on the client experience since they are ultimately the ones who choose to continue working with real live agents and brokers.
5. New tech bringing new markets. Finally, Skype, video messaging and other everyday tech is highlighted in a day-in-the-life vignette about how technology can not only simplify and speed up transactions, but open up entirely new markets as well.
Predictions for the next ten years
Drew Uher, Founder and CEO, HomeLight
Many have surmised that innovation and disruption will mark the end of the real estate agent. I don’t buy that. The modern real estate agent, the trusted advisor at the heart of this transaction, is more important now than ever.
At the same time, the way people buy and sell homes must change. If the past decade was defined by innovation around how to find a home, the next decade will be defined by innovation around the mechanics of the transaction.
Simplicity and certainty for clients and real estate agents should be a fundamental service — a public utility — that the real estate industry provides. Real estate agents are at the core of this business and will be a driving force behind how customers navigate new real estate technology.
Paul Saperstein, Broker Associate, The Saperstein Group brokered by eXp Realty, Delray Beach, Florida
Much of what I see is a shift in values, where homeowners want to spend more of their time doing what they love. We will see a continuing shift into urban and exurban markets due to buyers who want to trade long commutes for the increased amenities available there.
Condos and townhomes will become more desirable than single family houses because there is less time-consuming upkeep and maintenance. Rather than settle, buyers will wait to buy until they can actually afford exactly what they want. Sellers will have to be more willing to negotiate as the market shifts to a buyers market.
Big picture, the states with the most incoming seniors will be the strongest real estate markets, while the states with the highest real estate taxes will be the weakest real estate markets.
Jeremy Kamm, Warburg Realty, New York City
Since the end of summer, there has been a noticeable shift in the market with respect to buyer eagerness. What remains certain is that there are still active buyers out there, but the urgency to pull the trigger, submit an offer and sign a contract is no longer present. Buyers are taking their time and dragging their feet knowing that they have the upper hand.
Furthermore, offers are being submitted and accepted, only for sellers to see their buyers walk away from the deal. Properties that require renovation sit on the market for far too long until they are offered at a major discount. Those “just bring your toothbrush” listings are moving, as long as pricing reflects current market values.
Louis Adler, Principal and Co-Founder of REAL New York
The rise of technology: Technology will increasingly play a major role in the real estate sector next year. This will be shown in the rise of online home selling apps and platform, the use of social media, and the growth of smart home technology. Think of digital assistants or security cams. For 2020, we also expect an increase in the number of real estate-related technology startups, aiming to speed up real estate transactions.
Sustainable real estate: The world’s increasing interest in environmentally and socially conscious business practices will stimulate the real estate industry to design properties in a greener way. In the near future, a building’s real estate value will be very dependent on its sustainability rating.
Increase in co-living arrangements: Affordable or low-cost housing can be very hard to find, increasing the market for co-living. Co-living is one of the best approaches to finding affordable housing and can have great financial benefits. For next year, it won’t be uncommon to see a rise in co-living arrangements among older and younger people.
Santiago Arana, Managing Partner of The Agency, Los Angeles
This coming year is not going to be very different from 2019. Although there is a possibility that the second half of the year could slow down due to the elections and political uncertainty. Bottom line though, supply and demand is evident in the area I work in (L.A.’s westside), the amount of very good homes that are priced well and in good locations is far less than the amount of buyers.
Broker Wendy Arriz, Warburg Realty, New York City
Buyers are looking for deals and sellers want to maximize profits/sale prices. This mantra holds true in every market. That makes it a “broker’s market” to get deals done. I think 2020 will be the year of The Native New Yorker. I think natives who have been sitting on the sidelines are feeling ready to get on with their lives. They are a bold, smart, successful bunch who realize New York City is the greatest place to live in and now is a good a time as ever to address their real estate needs.
Elections typically signal uncertainty which is not conducive to a productive real estate market. Perhaps with Bloomberg entering the election, things will be different and more uplifting.
Jessica Swersey of Warburg Realty, New York City
My overall feeling about 2020 in terms of real estate is to expect more of the same in 2019, with perhaps more hesitation to pull the buying trigger. Oversaturation of unabsorbed inventory with more inventory to be released will lead us to inventory sitting on the market.
I think things will hold steady and remain a buyer’s market. I find there is always uncertainty around an election year, no matter who is running. I think this will cause a lot of buyers to sit further back and wait to see how things shake out.
The strategy for 2020 is to make sure sellers are pitch-perfect when listing their properties in this market. Everything from the price to the furniture, to the paint, must be right. If it isn’t right, the apartment will sit on the market and become stale.
Richard Haggerty, CEO, Hudson Gateway Association of Realtors and President, OneKey
Gazing into crystal balls for 10-year forecasts can be a tricky business at best. We certainly have come a long way during the previous decade, with much of the real estate activity centered around the recovery from the recession that began in 2008.
As we end the decade, we have made up much of the ground we lost during the recession, but we continue to be mired in a real estate environment of low inventory and sluggish creation of new housing stock. Will we be able to escape that cycle in the next decade? I think so, though it may take several years.
Some of the forces I think will define the 2020s are affordability, transportation and infrastructure and climate change. Affordability continues to haunt real estate markets nationwide. With many millennials mired in student loan debt and the rising costs of housing, how are they going to enter the market? What kind of housing are they going to be seeking? What about Gen Z, who will start to enter the market in the coming decade?
As I look out of my office window in White Plains, New York, I see a hole in the ground that will be replaced by almost 800 multifamily units priced in the $3,000 to $4,500 range per month. When I look out of my North-facing window of my apartment on the Upper East Side of Manhattan, I see a new 24-story luxury condominium being built, with asking prices ranging from $2.5 million to $10 million. My crystal ball says when it comes to millennials and Gen Z, the multifamily new construction will thrive in the next decade from an affordability perspective, and the luxury condo towers will face stiffer headwinds.
One trend we saw in the 2010s that I believe will continue to be an even greater force in the 2020s is the importance of transportation. Access to mass transit is a driving force in housing choice, and in the coming decade we will see that driverless vehicles and the evolution of drones will reshape our transportation needs, which will have a direct impact on real estate development.
What is interesting is that more and more counties and municipalities are starting to incorporate major transit and infrastructure elements in their development planning as opposed to relying on state or federal initiatives.
The City of New Rochelle, in Westchester County just north of New York City, is a perfect example of the type of comprehensive planning that blends residential, commercial and transit components into one master plan that can be marketed to potential residents. This type of integrated planning that incorporates major transit and infrastructure elements will become more prevalent in the next decade.
A significant issue I see shaping real estate development and consumer choice in the next decade is climate change, and I certainly hope it will not be the force I anticipate it will be. The fact that we are still in a political environment where “deniers” are rolling back legislation meant slow down the effects of climate change is deeply troubling and disheartening.
The science has illustrated the causes and effects of climate change. A headline in the December 21 issue of the Los Angeles Times read “In 2019, California was rocked by earthquakes, blackouts and wildfires.” What does that portend for the next decade? How will continued extreme weather impact property insurance and property values?
It’s my fervent hope that the next decade will see development that occurs outside those areas that will be most susceptible to climate change, that we embrace new energy sources that have less impact on our environment, and that we take dramatic steps to reduce our carbon footprint in how we live and consume resources.
Obviously, many other factors will shape real estate in the next decade – the growing impact artificial intelligence will have on our daily lives, the growing trend of communal living, especially in urban areas and reduced reliance on traditional forms of transportation.
The next decade will also come with many challenges we do not yet see in our crystal balls, but I’m confident we have the collective tenacity to overcome those challenges when we work together for long-term solutions.
Brad Pauly, Broker/Owner, Pauly Presley Realty, Austin TX
I am bullish on the real estate market for 2020, but I don’t like to predict too far in the future. Interest rates should stay low, inventory is still low (in Austin, TX), and there remains a healthy influx of new Austin residents.
There are some concerns for the next 5-10 years in some cities who have older homeowners, but do not have fast growing economies. As Baby Boomers get older and need to sell their properties, there may be more homes chasing Buyers than the other way around. However, this should not affect the Austin market.
George Case, Warburg Realty, New York City
I think in areas like Manhattan, where new construction has been booming, there will be a certain amount of buyers’ fatigue. With what seems like an endless number of choices with, ironically, very limited finish and floor plan distinctions or variations, people may be looking to pre-war and earlier post-war options.
User-friendly amenities will remain important with dog runs, roof decks and work-friendly spaces becoming increasingly important. Specifically in Manhattan, I think the pricing of existing homes will stay relatively flat and new construction will offer lower pricing with added sponsor incentives.
We’ve completely changed our approach to marketing this year and have established a communication plan that will more effectively communicate our skillset and the importance of a full-service team to both buyers and sellers.
As staging, marketing, and PR are increasingly important to trade real estate, so is the effectiveness of communicating who we are as people, what skills we bring to our profession and how well we navigate this market.
Political uncertainty, a slowing job market, global trade friction and new legislation that adversely affect investment in New York real estate will have consequences on the market in 2020. I think as development continues to exhaust demand for housing in the city, and as almost every neighborhood has been “rediscovered” by first time home buyers, we’ll see a recalibration of priorities in buying and selling in NY.
Interestingly, this morphs the role of the agent into a different animal. As well as understanding market cues, compiling and interpreting analytics, and negotiating prowess, the “new realtor” needs to understand design trends, marketing trends, and stay abreast of evolving avenues for exposure. He is a hybrid of marketing and design guru with a reliable financial advisor thrown in for good measure.
This election year is definitely a “nail biter year” for everyone— conservative or liberal, Republican or Democrat. As the country grows increasingly more polarized in terms of political priorities and the potential for another political upheaval, the sensitivity will run high in areas on “the front” of change—industry regulation and global trade and their effect on an already slowing job market will certainly influence timing for buyers and sellers. Buyers with strong financials can take advantage of a lethargic market with low interest rates.
Ruth Pfeffer, Associate Broker, Charles Rutenberg Realty, Inc., Plainview NY
In ten years, Americans will continue to look at real estate investments as a primary source of wealth. Interest rates have been relatively stable, and the economy has been strong. There will be corrections along the way, but there is no reason to believe that we will see a burst in the housing market bubble like we did 10 years ago
Broker Arlene Reed, Warburg Realty, New York City
Slow and steady! More of the same! US home prices have been growing steadily but at a slower rate than the previous year. With slow price growth, slight home value appreciation, moderate sales and short supply we are seeing conditions leveling. 2020 should remain much like 2019.
Despite a global economic slowdown, the US real estate market remains stable. Our economy is good, the job market remains strong and the unemployment rate is down. Mortgage rates are very low and expected to stay that way. There is much talk of a recession but if there is one it will not be due to the housing market.
What might trigger a recession is trade policy, a stock market correction, or a geopolitical crisis. There is a broad feeling of uncertainty. Investors are finding a shortage of deals with desirable yields. There is plenty of money around but investors are taking a conservative approach.
2020 looks to be shaping out as a balanced market. Prices are high and inventory is tight. Buyers can take advantage of the low rates and sellers can take advantage of the low inventory. It is a seller’s market for affordable homes and a buyer’s market at the luxury end.
There is a severe shortage of affordable housing with most housing being built for the wealthier. It is important to note that trends do vary by region. New York City seems to be on a different path than most of the country.
For NYC, it is definitely a buyer’s market. There are buyers around but there is no sense of urgency. Buyers are looking for bargains, Prices have been declining, inventory is up as is the number of days on the market. I foresee a sustained slowdown for 2020 in NYC.
Jeff Holzmann, CEO, IRM
The multi-family sector will continue to outperform single-family
Middle-sized deal performance will continue to exceed that of small and large-sized deals
Class A markets (San Francisco, NYC, and Boston) will continue to decline, while smaller markets in the middle of the country will boom
The luxury market will decline as investors anticipate an impending economic slowdown, but they will look to other places to put their investments, including crowdfunding
Real estate crowdfunding will enter “Phase 2,” maturing as an industry; diversity in investment will become of utmost importance
Sinéad DeRóiste, ERA Parrish Legacy Group, Raleigh/Durham NC
The next 10 years in real estate will be just adventurous as the last 10 years, hopefully minus any banking issues or financing crisis.
Now that the market has been cleared for take off plenty of areas are seeing steady growth from new construction communities establishing in pocket areas, to high-rise developments in urban areas looking to expand housing availability while providing the convenience of location.
Let us not forget how technology is connecting the real estate market internationally, which includes new investment groups approaching new markets to develop and improve residential housing.
The next 10 years will be whatever our economy supports it to be. Right now with relatively low interest rates, zero down financing, and other options for obtaining a mortgage it is easier to purchase a home today however the criteria remains strict in an effort to keep us away from overspending on things that impact housing affordability.
As long as we are continuing to have new life brought into this world, there will be a continued need for housing.
Right now in Raleigh we are still in a seller’s market and 2020 does not look to be changing that. So long as the inventory is low and there is a high demand from buyer’s for housing, we will remain in a seller’s market.
Being in a seller’s market is neither a good thing or a bad thing, in terms of real estate in general, understanding that all things in life go in cycles so does the real estate market…unless we experience huge job shortages or another financial crisis we could remain in a seller’s market for some time.
Broker Joel Moss, Warburg Realty, New York City
I think 2020 will continue to be slow and steady with very little change from our current market. If anything, I think it will be a little slower than 2019 which will lead to an even stronger buyer’s market. Election years are filled with uncertainty and that causes buyers and sellers to proceed cautiously.
Jeremy Browne, Senior Vice President, TTR Sotheby’s International Realty, Arlington VA
I am looking closely at the so-called “silver tsunami,” in which 77 million baby boomers will have to sell homes to downsize or move to retirement facilities in the coming years. According to researchers at Zillow, 9 million of these residences will hit the market between 2017 and 2027.
By 2037, roughly 21 million homes will have to be sold as a result of baby boomers. As real estate agents, we need to stay on top of technological advancement in our industry and take a consultative approach with these sellers to navigate through their home sales.
Brandon Marianne Lee, Salesperson, Triplemint, New York City
People are going to revolt against the terrible quality new construction that we’ve seen pop up all over the city. Already, a large portion of my clientele wants renovated pre-war construction because they’ve heard the horror stories.
Some new construction is amazing, but others are a mess. The paper-thin walls and low-grade everything is taking a toll and in the future, the craftsmanship and ability to last will be the main thrusts.
Dina Ufberg, COO of HelloRented
The real estate industry, from rental and residential to commercial, will rapidly transition from a manual and paper-laden process to an end-to-end digital experience in the next ten years. Investors have been pouring money into proptech ventures that utilize machine learning, artificial intelligence and real-time big data analytics to cater to the needs of tech-savvy millennials and Gen Z who continue to take over the market as the main demographics of renters.
New tech will make it so renters can lease an apartment in a matter of minutes by filling out a few questions and snapping a selfie that enables an algorithm to quickly build and vet their application in real-time.
Real estate tech is working to disrupt all constructs of the market from screening renters and completing background checks in seconds to helping families purchase homes and enabling easier leasing processes that allow a higher number of short-term leases and landlords to compete with Airbnb and hoteliers.
Jacob Henderson, Salesperson, Citi Habitats, Brooklyn, NY
Markets tend to follow an eight to ten-year cycle – so when the market is down, it will always come back up… it’s only a matter of time. What happens in the upcoming 2020 presidential election will definitely have an impact on the real estate industry, as the leadership in Washington exerts considerable influence – through the passage of new tax laws and other legislation that affects homeowners.
The next decade will bring inevitable advances in technology which will likely simplify the home buying process – both for consumers and real estate agents. I believe that with the increased availability of information, insider knowledge of both local market conditions and inventory will be essential for agents. We need to embrace the role of trusted advisor and advocate.
Home seekers can already view thousands of properties for sale online, but it takes an expert to help them make the dream a reality. Agents can help buyers decide if a home is a good value, understand financing options, and educate them on how the local market has been trending. With the rise of information, the ability of an agent to bring creative solutions to the table will be even more important in the future.”
Patrick Fogarty, Hilton & Hyland, Los Angeles
I forecast the market continuing with stable growth for 2020 and the next 10 years. I believe interest rates will remain historically low and attractive to buyers spurring continued purchases. I see buyers having confidence in the market and continuing to buy but being very considered with regard to price, in light of the upcoming US elections. I think as long as sellers price their properties appropriately they will continue to sell promptly.
Raf Howery, CEO, Kukun
Roofing and window demand will grow disproportionately. Climate change, severe storms, aging homes and millennials buying in urban areas will fuel the demand and as a result drive up costs. Millennials will drive more renovation in big cities as they buy older, smaller homes and flip them to modern architecture.
SFR (Single Family Rentals) companies will gobble up more homes in mid-tier cities driving home prices up and fueling more renovations. There will be a shortage of available construction workers as older contractors retire and fewer young contractors enter the field. All of the above will raise the cost of renovations, specifically labor costs.
Jim Armstrong, JG Real Estate, Philadelphia
I live and sell real estate in Philadelphia, the sixth largest market in the US, with more than 1.58 million people.
Philadelphia real estate has appreciated 147 percent since 2000, while the inventory has decreased by 4.8 percent over the last year. Due to a strong economy, growing labor market, and affordable housing prices attracting New Yorkers who’ve been priced out of their own market, Philadelphia’s population is growing faster than the national average.
Factor in the large number of Millennials turning 30 and buying their first homes next year, and Philly will continue to be an increasingly competitive housing market.
In addition, the short- and long-term rental market will continue to grow as Philly has the third largest student population on the East Coast and is a hot destination with numerous recent honors.
Based on these factors, my 10-year predictions include:
- A continued shortage of housing inventory
- Increased demand for traditional rentals
- Increased demand for AirBNB rentals
- Increased demand for first-time homes
Nicholas Oliver, Principal Broker, HomeDax Real Estate, New York City
We anticipate sustained price appreciation in residential real estate over the next decade, fueled by rising incomes and a resurgence in household formation driven by a strong US economy. Key risks to residential real estate prices include the passage of tenant-friendly legislation (such as what was passed recently in New York), global conflicts, an increase in redistributive policies or taxes in the United States, or a prolonged slowdown in economic growth.
Jason Kraus, Broker, RE/MAX Advanced Realty, Indianapolis, IN
The housing market is set to continue on course for 2020. The market has remained strong for the last two years mainly because of a lack of inventory and new buyers continue to enter the market with historically low mortgage rates.
Don’t expect a distinct change in the market until inventory balances. As long as we have a large pool of buyers vying for a limited amount of homes in their price range, we will continue to see prices rise. In addition we will continue to have multiple offers and a fast moving real estate market. This is especially true for homes priced within reach of a growing market of first time home buyers. We have seen a balancing of the market and inventory in higher priced homes.
Due to the strong demand, lenders have continued to roll out loan options for well qualified buyers. You don’t need to have 20 percent down to realize your dream of home ownership. In fact, lenders have continued to provide low down payment options including 3 percent and 1 percent down conventional loan options. That is even lower than the 3.5 percent down traditionally needed for an FHA loan.
The first time home buyer options that disappeared after the housing crash are making a comeback as well. Expect this trend to continue as lenders look to bring more Millennial buyers into the housing market.
For seller… be prepared to support the strong values and high prices that buyers are providing. As prices continue to rise, buyers are being much more detailed during the inspection process. In situations where buyers have been in multiple offer situations and paid a premium to be the selected offer, they are expecting a product worth the expenditure.
So, in 2020 the inspection period will be increasingly important to the transaction. Buyers will be scrutinizing the home to ensure their investment is sound. So, sellers will need to have repairs addressed before listing or face a growing challenge to keep deals together through the inspection process.
2020 will continue a focus on outdoor living space. This is true for entertaining, but also pet ownership. Studies indicate that the largest influx of buyers into the market are millennials and they also represent the largest population of animal and dog ownership. That unique stat means they have a greater interest to make sure their home is pet-friendly. So, fenced backyards will continue to be a highly sought after feature. In addition, a patio, deck or relaxing area to watch Fido or Spot run and play will continue to be important. So, if you are a seller don’t just focus on kitchens and bathroom to add value. A great spot to add value, often for less of an investment, is that outdoor living space.
Nicholas Henton, Associate, RE/MAX Professionals, Stillwater, MN
The outlook for home buyers in 2020 will be similar to how it was in 2019 for the most part. Interest rates are projected to remain low with almost all banks and economists in agreement that they will stay below 4 percent for a 30 year fixed mortgage. Throughout 2020, housing inventory will remain tight with affordable homes for first time home buyers being harder to come by.
For the first time, millennials will make up 50 percent of the home buying market, more than the Baby Boomers and Gen Xers combined. We will have an average first time home buyer age around 30.
That number continues to rise as homes become increasingly expensive, buyers are still carrying student loan debt, and generational philosophies and goals have changed from previous years. Urban homes close to work are going to continue to increase in demand as the millennials typically prioritize shorter commute times over larger homes and yards.
The next largest segment of the market will be those in the 35-45 year old bracket. They are buying their 2nd, or possibly third home that they plan to live in until they are nearing retirement. These will be your suburban home buyers focused on larger homes that are well designed with open floorplans and located in desirable school districts. Along with school districts, another motivating factor for these buyers will be proximity to popular dining and entertainment spots.
Jamie Safier, Douglas Elliman, New York City
It’s always hard to predict the future with 100 percent certainty, but I think 2020 will be a good year for both buyers and sellers across the US. With mortgage rates low, and actually predicted to keep dropping, it’s a great time to get a loan, which benefits both sides. And with the job market likely holding steady, more millennials, who have been renters for most of the last decade, will begin to take the plunge from renting, into home ownership.
Over the course of the next decade, I think the industry will continue to change as it has over the last few years, but some things will stay the same.. While we have seen technology impact the industry in a number of ways, and a lot of talk about how agents are being “replaced,” at the end of the day, buying or selling a home is a long and tiresome process, and frankly something that an expert in the field will always make much, much less of a hassle.
Just like WebMD and other sites of that ilk will never replace medical professionals, real estate technology can never fully replace the benefits one gains from having an expert real estate agent facilitate the home buying and selling experience.
Ryan Hardy, Broker, Gold Coast Realty Chicago, Chicago
In the next 10 years, I think people will look back and wish they bought a house or condo in 2020. Homeowners who bought a home in 2010 made a great decision in hindsight, but it wasn’t so obvious at the time. There was a lot of uncertainty and nervousness in the real estate market back then and I think that’s true today as well.
Buyers today are battling with uncertainty about the economy, politics and prices and that’s caused the market to slow and has also put pressure on prices. There are good deals out there right now and interest rates are extremely low. It’s impossible to pick the exact bottom, but with real estate, time is your friend. Even if the market dips a little lower, in 10 years I think today’s buyers will be very happy with their decision.
Ruth Shin, Founder and CEO, PropertyNest, Brooklyn NY
Concierge Services for Resells: Most home buyers are looking for places that are move-in ready with no or minimal improvements and alterations required. In 2020 more brokerage services will start offering concierge services dedicated to sprucing up the value of homes prior to their sale. These concierge services include inspections, repairs, cleaning, de-cluttering, and staging, among other services.
Growing Availability of Bridge Loans: In 2020 home buyers will get broader access to bridge loans. These loans, more and more offered by brokerages and independent lending firms, enable resellers to borrow money to purchase a new home before selling the old one. Typically bridge loans don’t require monthly payments for the first few months.
Bridge loans reduce uncertainty and take the pressure off to sell and buy – and finance all – at the exact same time. More importantly, the delayed monthly payments give homeowners the time to sell their home and pay off the loan after the move. We will see the number of residential brokerage firms that offer bridge loan programs to their clients increase next year.
Brian Beatty, Team Leader, Brian Beatty Team of Keller Williams Realty, Charleston SC, Host of the Brian Beatty Real Estate Show on 1250 WTMA
Moving forward, millennials are going to start to make up the vast majority of the market. This is the generation who puts more value on experiences than assets, but that’s starting to change. These people, many of whom are already doing really well financially, are starting to put down roots.
And because they are advancing in their careers, they don’t necessarily need to hop into the “starter home” market. In fact, we are working with millennials who are buying $400,000 to $700,000 homes in their 20s and 30s and skipping the more inexpensive and smaller homes altogether.
Here’s the challenge: There isn’t a ton of inventory available in the mid-tier, $400,000 to $700,000 range. The people who currently own homes in that range are looking on Zillow, Trulia, realtor.com, before putting their homes on the market. Only if they find their perfect house will they then make a move to put their own home on the market.
This is creating a traffic jam at those price points. So now we have two groups of people in the same boat: Millennials who have enough wealth to skip the traditional starter homes, and Gen X/Boomers who aren’t selling their $400,000+ homes because the inventory just isn’t there to entice them to move.
What does it all mean? The $100,000 to $350,000 are going to keep selling. There will continue to be buyers at that level. But as the traffic jam continues in the mid-tier market, we could start to see prices getting driven up in order to entice sellers to finally make that move and sell to a pool which includes older millennials. Will that over-inflate later into the 2020s? Only time will tell!
Tracy McLaughlin, Director of Luxury Estates, The Agency, Marin County CA
Since the financial markets remain very strong, interest rates remain very low. There is talk of rising inflation and continued low inventory which are all excellent barometers for a continued strong residential market, especially in places like the Bay Area in northern California which continues to have excellent job growth with high wages and significant opportunities.
For these reasons, I do not anticipate any decline or real softening in the residential markets. That being said, I do feel buyers feel the market is still a bit inflated and there continues to be a struggle between seller’s expectations for price and what buyers want to pay, even in a strong market. Typically election years are challenging for our business. However, again, based on all of these strong economic indicators, I feel very bullish about 2020 for residential real estate.