Several threats are coming for the real estate market in 2019. Two prominent issues to watch for are rising interest rates and the economy. Below is a list of current and long-term issues to watch out for in the following industry next year.
Current Issues to Watch:
Interest rates and economy
Currently, interest rates are rising and commercial and residential real estate markets are seeing changes. Two of the most significant changes is a decreasing demand for commercial property and higher home mortgage rates. Homes are becoming less affordable due to increased rates and are also limiting the value appreciation for commercial real estate.
Politics and Political Uncertainty
Tax reform and policies targeted to balance trade with other countries will impact jobs, incomes, and both commercial and residential property.
Affordability of Housing
The reason why there are not many affordable houses across various income brackets (excluding the 1%) is of low wages, mortgage rates, and the underproduction of houses that has lasted almost two decades.
Demographic and Generational Change
There are four generations directly impacting commercial and residential real estate. These generations include office design, student, and elder housing.
E-commerce and Logistics
Due to increasing e-commerce in the retail sector, the growth in warehouses is being affected.
Many of the country’s roads, airports, bridges, sewer lines, public transit, and electricity is rapidly deteriorating, According to the American Society of Civil Engineers, an estimated $4.5 trillion is needed, to improve by 2025.
Every aspect of real estate is undergoing extreme changes as technology such as self-driving cars, manufacturing robots, and extensive use of smart building technology rapidly develops. Real estate is essentially needing to rapidly adapt to these types of technology.
Natural Disaster and Climate Change
This constant ongoing threat of natural disasters and climate change deeply impacts the real estate market by driving properties into an unaffordable range. These disasters include severe storms, wildfires, earthquakes, rising sea levels, and many more.
If Immigration is reduced by law, there will be a massive impact on new housing starts and home purchases as well as worsen the current skilled labor shortage in the U.S.
Energy and Water
Environmental damage is threatening natural resources that are vital to property and quality of life.