Happy September! Here at Rental Beast, we’re saying “goodbye” to beach vacations, “hello” to sweater weather, and we’ve been doing a lot of reflecting on recent real estate trends. We want you to feel knowledgeable about the market, so take a look at some trends we’ve been tracking during this summer and what they might mean.
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Trend 1: Uncertainty about the housing market
Q2 reports are in and reporting a modest, but still steady growth. While GDP is down from the high growth period 3% last quarter, its current level of 2% means that it remains strong. Despite the lowering mortgage rates, the sales market remains fairly sluggish. Experts are predicting a further slow down in the economy in the month ahead as consumer spending responds to higher post-trade war prices. However, low mortgage rates might improve, and strong levels of unemployment and high wage growth could buoy the home sales market further.
What it Might Mean: Could we be seeing the start of a slow down in the home buying cycle? Just 12% of people say they plan to buy a house in the next year, down from 14% last year. Also, If we are catapulted into a recession by the economy’s natural boom and bust behavior, it’s unlikely that Millennials will be able to buy houses on the tail-end.
Trend 2: Millennials (and, seemingly, everyone else) is on the Move to Washington, Texas, and Colorado
Millennial domination isn’t a new real estate trend! The impact Millennials are making on the housing market is not new— Millennials are expected to outpace boomers by 2028, and they are projected to tally 75% of the global workforce by 2025. This generation makes up the largest source of demand for rental housing and first-time homeownership, and their wants, needs, and limitations are changing the fabric of the real estate market. Right now, they are moving to Seattle, Texas, and Colorado, drawn by new tech jobs and appealing prices.
What it Might Mean: New homes needed in these hot markets. Also, perhaps the influx of Millennials in Texans and Coloradans will lead to a spike in multi-family in these areas, as Millennials prefer renting. Real estate agents in Texas and Colorado can brace themselves for Millennial impact by thinking about working with rentals. This generation, however, also makes up the biggest portion of first time homebuyers. Agents might want to dust off and refresh their outreach program to capture the business of first time homebuyers.
Trend 3: The US Population is Growing, but Unevenly
America’s population generally continues on its upwards trend. However, not all places grow at the same rate. Some so-called “superstar cities” are experiencing high levels of population growth, driven by their lucrative tech jobs. However, other places are experiencing a significant dearth of new workers. The upshot? In 2040, half of the population will live in eight states.
What it Might Mean: In areas of high growth, people will need places to live. In cities like Los Angeles, demand is out pacing supply, especially for affordable housing. How will builders keep up with the influx of demand for housing? There’s been some creative solutions, like micro-housing units, and some perhaps more practical solutions, like an exodus of young professionals to the suburbs. For areas of low-growth, and even population decline, it’s a bit more of a mystery. How will cities and domestic companies try to attract new workers? Will they move to different parts of the country?
Trend 4: Home building fell in July, but more building permits offers suggestions of strength
Although area of the country are growing too quickly for builders to keep up, for the third straight month, the amount of new construction. However, the number of permits issued for construction has risen to 8.4%, the largest gain from two years ago.
What it Means: This suggests a solution to growing population! The increase of building permits suggests that builders are taking notice of the growing population. However, what type of buildings. In Miami, for example, many new constructions stay unoccupied, and rent prices across the city are driven up.
Trend 5: Rising in Multi-family Rental Occupancy
In July, apartment occupancy rates climbed to the highest levels they have been since 2000.
Millennials drive this trend. Many believe— sometimes incorrectly— that renting is cheaper than buying. The flexibility of renting is also appealing to commitment-wary Millennials who are likely to move for work and not yet tied to a place through children or marriage.
What it Might Mean: While the housing market falter and goes into a down cycle often, renting remains enduringly popular with every segment of the population. For renters, the limited inventory of rentals will escalate the price of a unit even further. In July 2019, we wrote an article on what you could get in Boston for $3111, the average price according to a RentCafe report. For August 2019, the number has escalated to $3,528.
Trend 6: Tech is popular (but Realtors are still important!)
It seems as though tech trends are taking over the real estate space. We’ve been keeping our eye on iBuyers— even though they aren’t poised to enter the renting space any time soon— and the influx of new CRMs and MLS’ built to help real estate agents succeed.
What it Means: First, let’s get one thing straight— we do not think real estate agents are going to go extinct. We certainly can’t predict the future, but we don’t see the real estate agent profession disappearing anytime soon! (read this moving piece about why so many, including us, love real estate agents) Agents have plenty of new technology to choose from, but should choose continue to choose warily and not get bogged down by promises of new tech.
As with many real estate trends, we have more questions than answers. However, these are seven trends we’re keeping on our radar. One thing that is clear from these real estate trends is the enduring popularity of multi-family units. Get ready to capture your share of the 12$ Billion available in leasing commission by working with rentals. To learn more about the Rental Beast platform or to request a no-obligation demo visit Rental Beast for Real Estate Agents