8 Real Estate Predictions For 2018

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What a difference a decade makes. In 2007-08, the real estate market unraveled. Today, it looks absolutely wonderful.

The National Association of Realtors has a cheery outlook on 2018, predicting that total existing home sales in the second quarter of next year will keep pace with the same period the year before, and that new single-family home sales and housing starts will surge by 14% and 8.8%, respectively.

But—as always—there are some nuances to the market you need to be aware of as a real estate agent. Below, we examine eight trends that will likely affect you and your business in the coming year.

1. Short-term rental popularity will keep increasing

While short-term rental sites like Airbnb are certainly established, they aren’t yet totally ingrained in the minds of homeowners as an obvious option for additional income.

Airbnb has experienced incredible growth in the past three years alone. In 2014, the company was valued at $10 billion; this year, it exploded to a valuation of $31 billion. In 2016, 44.8 million people used the site for short-term rentals; that figure is expected to reach 86.5 million by 2021.

In the coming year, expect the short-term rental market to continue to grow as more homeowners recognize the opportunity to make extra cash from renting either their entire homes or individual rooms.

Listing on Airbnb's website, via Airbnb

Airbnb listing

2. Downsizing will continue

Downsizing is the hot trend in real estate. HGTV has seen success with a few television shows about people who opt to live smaller, such as “Tiny House, Big Living” and “Tiny Luxury.”

While these tiny homes may be more of a fad and face obstacles like zoning restrictions, they could also represent a growing reality for many in the real estate market. Faced with exploding rents and prices, many Americans are trying to do more with less, which means a growing market for smaller homes, tinier apartments, and compact condos.

Tiny home via Pixabay

(via Pixabay)

More and more people are recognizing the benefits of removing unwanted clutter and creating a basic living space, freeing up time and money for them to spend on living their lives.

3. Secondary markets will surge

As rents explode in the biggest, hottest markets, consumers will look for value elsewhere. This means big growth for secondary markets, so you may want to expand your focus to the suburbs—or at least to overlooked, less-expensive areas of the city.

Take a look at just about any real estate investment ranking list out there and you’ll see that traditional real estate hotspots like San Francisco and New York are consistently dropping. They’ve hit some incredible peaks, and now they’re starting to flatline.

These days, cities like Seattle and Miami—as well as smaller markets on the outskirts of such cities—are enjoying surges in popularity.

Image of Seattle skyline via Pixabay

Seattle (via Pixabay)

4. The industry may have a downturn—but a soft one

We’ve been collectively nervous about a housing market bubble since 2008. But while there are concerns that the real estate market may be due for a correction, experts are hopeful that it will be a soft one that sets the stage for steady future growth.

We’ve weathered extreme collapses of the housing market in recent decades, including the savings-and-loan debacle in the 1980s, the dot-com bubble burst of the early 2000s, and, of course, the 2007-08 crash.

Unlike past hard landings, there are good signs for a soft downturn all around: a low unemployment rate, high asset prices, and a tight monetary policy at the Fed, suggesting that investors are a bit more conservative these days. In fact, there’s a lot of hope that we can avoid a downturn altogether and continue on this slow and steady path. Fingers crossed.

5. Inventory will surge

One reason real estate values may take a hit is that inventory has a good chance of finally catching up with demand in 2018. For the past few years, the industry has struggled with a shortage of homes on the market.

Experts predict inventory growth on the horizon, which should provide some relief to buyers struggling with finding the right home at a good price due to so much competition.

It’s an indication that the real estate industry has finally reached the point of confidence that prompts home construction, rather than simply shuffling buyers between existing homes on the market.

6. A new generation will hit the housing market

Move aside, millennials: Generation Z has arrived. This generation—generally accepted as those born between 1995 and 2001—has finally aged into the post-college housing market.

Image via Pixabay

(via Pixabay)

They’re an altogether different market to cater to, preferring a more urban environment paired with different expectations for their living spaces than previous generations. Generation Z is even more tech-savvy than millennials since they were born into the age of computers.

They’ve already had a tremendous impact on the tech and retail markets, and real estate agents will increasingly find them among their customers in 2018.

7. Baby boomers will change the market

As you keep an eye out for Generation Z, don’t forget about the baby boomers. The “silver tsunami” is on the horizon for the real estate industry. Baby boomers are increasingly demanding urban living as well, but thanks to poor financial planning and economic changes they’re struggling to afford that kind of lifestyle.

This creates an interesting challenge for the real estate industry: a demand for apartment and condo complexes that cater to seniors. Many baby boomers now have an empty nest and want to downsize while maintaining a high standard of living as their need for assistance increases.

Americans are living longer and engaging in more active lifestyles, creating a big opportunity for housing catering to this growing market sector. This may require the industry to totally rethink senior housing in 2018, and beyond.

8. Even more real estate management software will hit the market

Since the start of 2017, we’ve added 25 new options to Catperra’s real estate property management software directory, bringing the total to 249 options as of December 2017.

This is a trend that’s almost certain to continue in 2018, as more software companies seek to meet the growing needs of real estate agents and property managers who want to better organize their listings and create more leads.

Tell us your predictions

You’re the one in the trenches, selling houses and talking to buyers. We want to hear from you! What trends have you noticed over the past year, and what are you expecting in 2018? Let us know in the comments below.

Looking for Real Estate Property Management software? Check out Capterra's list of the best Real Estate Property Management software solutions.

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About the Author

Dan Taylor

Dan is a content writer at Capterra, specializing in hotel management, construction and real estate. Outside the office, he enjoys spending time with his family and friends, catching up with the latest offering from HBO or paying a visit to a new place.

Comments

I am a real estate agent in Albuquerque NM. Our market seems to lag the rest of the southwest. Our home prices are still slightly below the peak in 2007. There were a ton of developed residential lots in 2007. Many of these lots were foreclosed. Builders have been buying up these lots at artificial low prices. The majority of these lots have been absorbed by the market. Home builders are developing new lots or purchasing new developments from developers. These new homes are going to be a lot more expensive. I predict we will see increased prices and increased inventory. Many first time home buyers are being priced out of the market.

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