2018 Real Estate Trends: 14 Things to Watch For and Leverage

It’s hard to think of a career more fluid than real estate. It’s a profession filled with twists and turns, ups and downs and is always in a state of fluctuation.  Understanding those changes and keeping abreast of real estate trends is critical to both the real estate business – and your success as an agent or broker.

Perhaps the great philosopher, Socrates, said it best:

“The secret of change is to focus all of your energy, not on fighting the old, but on building the new.”

Market changes, shifts, and trends make creating a 5-year, 3-year or even a 1-year real estate business plan daunting. When you add to that the fact that real estate is subject to an expansive number of extraneous forces like job growth, interest rates, housing prices and other economic trends, trying to create a predictable plan seems like a fool’s game.

The best that we can do is understand and appreciate trends in real estate and position ourselves so that we can leverage and take advantage of the opportunities. Here, we have 14 (yes 14!) 2018 real estate trends that you’ll want to keep an eye on.

2018 Real Estate Trends

1. The “surban” real estate trend

Surban is not a typo. Think of it like the Brangelina of real estate: a hybrid of both urban and suburban. Surban is defined as a suburban area that has the feel of urban, with the walkability to great retail from a house or apartment. The Urban Land Institute estimates that these areas will draw at least 80 percent of the coming wave of households and will attract the most households in the next ten years. To see surban in all its glory, check out Downtown Naperville, Illinois, Old Town Pasadena, California, Legacy Town Center in Plano, Texas, Satana Row in San Jose, and Downtown Tempe, Arizona.

2. The Millennials come to power

We’ve heard more than our fair share about Millennials in the past few years. To recap: they’re the fastest growing segment of the workforce and will be the future of real estate for the next couple of decades. They were born between 1983 and 2001, and have changed everything about technology and the way we communicate. This high-profile cohort values their lifestyle, are seen as socially liberal, rely heavily on word of mouth, are educated and like lots of information quickly. They’re also the first generation with more educated women than men (see trend #12). This powerful group represents around 34% of home buyers and 18% of home sellers today, according to NAR,  and their needs vary significantly from previous generations. You can gain their trust and loyalty by knowing what makes them tick, up your technology and marketing game, and hone in on great client testimonials.

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3. Generation Z gets its start in real estate

If you’ve been troubled, tortured and out of step with Millennials, stand back as Generation Z enters the real estate market. Also known as the “net” or “digital” generation, their experiences are mostly virtual.  Gen Z was born between 1993-2000, and Forbes reports their tribe makes up around 25% of the U.S. population, making them a larger cohort than both Baby Boomers and Millennials. The oldest Gen Z’s are just graduating college and entering the housing market. They’re burdened with student debt, lived their childhoods with 9/11 and the threat of terrorism, rely heavily on technology, are highly educated, and are culturally varied and diverse. To connect with these folks, you’ll need to be tech savvy (like, really tech savvy), smart – 50% of this generation is educated at a university, higher than any previous generation, and run a socially conscious real estate company – 93% of this generation say that a company’s impact on society affects their decision to do business.

4. Trumponomics

Trying to predict the outcomes of an uncertain future when it comes to the Trump administration may look and feel a bit like trying to nail jello to a wall. A big part of the difficulty lies in the vast range of opinions and policies that Trump has advocated. Fortune Magazine charted them out in traditional quadrants and ended up with the following graph:

 

Those radically different and sometimes opposing positions are what makes predictions tricky. There are a couple of constants that we anticipate in conjunction with both President Trump and a Republican controlled congress. Most pundits would agree that we are likely to see the following traits on the political front:

  • Less governmental regulation and more reliance on the private sector
  • More favorable tax and regulatory treatment of businesses
  • A rollback or repeal of specific initiatives implemented during the Obama Administration

5. 2018 Mortgage interest markets

Most real estate and investment experts are predicting a strong 2018 for the U.S. housing market with almost no risk of a crash downturn through 2020. The market overall is predicted to remain steady in 2018 with approximately 6 to 6.5 million sales annually and 160,000 new homes slated to be built per year up to 2024.

Most experts predict that interest rates on 30 year fixed conventional mortgage loans will remain low but will rise slightly in the coming years. The moderate upward pressure on mortgage rates is expected to be fueled by two factors:

  • A growing economy, tax cuts and deregulation which will push demand and stimulate home prices; and
  • Inflationary pressures which will cause the FED to increase rates to hold down too much growth too fast

6) 2018 Home prices and appreciation

There will be upward pressure on home prices in 2018. In areas of robust economic activity, annual appreciation is predicted to be at or over the 10% marker. The top forecast markets include places like Seattle, Washington at 11.2%, Portland, Oregon at 11.1% and Denver, Colorado at 9.9%. Nationally the median price of existing homes has steadily recovered since its lows of 2010 and 2011.

7) New construction and inventory

New home construction will have a hard time keeping up with demand in 2018. While the number of new housing starts will increase, the home construction industry is plagued by two primary factors:

  1. The availability and hurdles to develop new land
  2. Shortages in the skilled labor workforce

For 2018 new construction starts are expected to increase 5% to $713 billion. Inventory is likely to remain low next year, but it could increase by year-end.

2018 Real Estate Technology Trends

8) Attack of the drones

Drones are no longer just a toy. We’re finding new ways to utilize drone technology every day, including in real estate.  Drones bring the real estate profession the ability to showcase properties, neighborhoods and their surrounding areas through the use of affordable aerial videos and are already being used in many markets. This trend will accelerate not just as a cool and different way of creating a virtual tour, but as a better way of capturing the lifestyle of a home and the surrounding neighborhood. Don’t forget to check out the FAA’s Small Unmanned Aircraft Rule before you use them in your market.

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9) The video craze

Let’s start this one out with some compelling stats: According to NAR,  73% of homeowners say they are more likely to list with a REALTOR who uses video for marketing, but only 4% of agents put the listings on YouTube. Real estate listings with a video receive 403% more inquiries than those without. Do you see your opportunity?

Video is exploding on websites and social media platforms. It simply isn’t an option anymore. How can agents use it? Showcase home and virtual tours, educate your clients on the home buying or selling journey, produce video testimonials from past clients, feature cool things in your city or market. Opportunities with real estate videos are limitless.

10) Responsive real estate website design trend

First-time homebuyers are getting younger, and they’re using mobile phones and tablets to search for homes.  Is your real estate website or app ready for these clients?

Mobile responsive sites automatically scale your content and format to suit whatever platform your clients happen to be viewing your site on at the time–a home computer, a smartphone or a tablet. Even Google recommends responsive web design because it makes managing your SEO strategy easier and offers a greater user-experience across many devices.

11) Augmented reality 

Augmented Reality (AR) is the enhancement of real-world environments by overlaying virtual data, images, etc. onto a physical space. Technological devices, like our smartphones, have access to multiple sources of information drawn from many sites. Moving forward we will experience more and more of these sources blended together.

Here’s an example of how this can work for real estate: When you look at the front of a home through the camera of your cell phone, multiple layers of information can be displayed on your screen. For example, nearby restaurants, parks, schools, home prices, other homes for sale in the vicinity, etc. Layar has an app for your phone where you can give this a try.

2018 Trends to serve real estate clients better

12) All the single ladies real estate trend

In 2016 single females made up 17% of buyers in the market, according to NAR. Only 7% were single males, and 8% were unmarried couples. Over the last ten years, single females have been the fastest growing demographic of buyers, and that trend is expected to grow. And these women are educated: About 45% of millennial women are college-educated, compared to 38% of men, according to data from the Pew Research Center. To reach these women, you’ll need to rely on your social circles and referrals from friends: 47% of them find their agent via referrals.  

13) Student debt real estate trend

There’s no shortage of statistics when it comes to homebuyers with student debt: 27% of all buyers have student debt, 50% of first time home buyers have student debt, and 50% of those with student loan debt owe between $10,000 and $50,000, according to NAR. What this story doesn’t tell is the potentially large number of people who were not able to become buyers due to their student debt. NAR statistics demonstrate that debt to income issues are the number one reason for the rejection of mortgage applications. How can you help get this educated group of people into a home? Be sure to have top-notch lending and debt counseling resources that can help your potential buyers and stay abreast of low down payment programs and specific financial incentives such as local bond programs.

14) Repeat real estate business trend

Every seller is also a potential buyer. But a troubling statistic stands out when we look at repeat business: Only 55% of sellers use their listing agent as their buyer representative, according to NAR. This means that a lot of business is getting lost by listing agents not picking up the seller’s eventual buying transaction. When NAR asked why more people did not use the same agent the most common response from consumers was, “I did not know my agent did that.” If that comment strikes you as strange, think about the way we typically position ourselves in a listing presentation. We claim we are the experts at selling. We tell the consumer that some agents represent sellers and others represent buyers. Then we tout our experience on the listing side. We could probably all do a better job of making sure that we discuss with sellers their plans and how we can represent them as a buyer during the selling of their existing home.

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