The real estate market can be difficult to predict. However, staying on top of trends and tendencies can help buyers and sellers get the deals they want. Below is a list of trends to be aware of as 2018 continues.
Millennials
According to the Pew Research Center, the millennial generation was born between 1981 and 1996. This means that the tail end of this generation is currently graduating college, and many of these young adults are moving out. Many rent, but some will begin to purchase homes of their own, and millennials currently make up the largest share of home buyers.
However, millennials may vary from their parents when it comes to real estate trends. Almost half of millennial buyers have student loan debt, and they see their purchases as financial investments. These millennials are buying less in purely urban areas and trending toward areas that have a mix of suburban and urban features.
Furthermore, millennials seem to exhibit more flexibility when it comes to purchasing real estate. This includes more of a willingness to buy small homes or micro-units, to enter into coliving situations, and to buy investment homes.
The tech industry
Though the American tech industry largely centers around Silicon Valley, as this sector expands, it will continue to have a greater impact on the United States as a whole.
A market to keep in mind will be Seattle, which the Urban Land Institute predicts will have the hottest market in 2018. This growth is due in part to the presence of Amazon, which is headquartered in Seattle.
As tech companies expand to new cities – Amazon is seeking a city to house its second headquarters, or “HQ2,” for instance – there will be a continued impact on real estate markets. The presence of tech companies leads to job growth, as well as evolving workplace locations when demand for office space and housing surge. In response to tech companies moving in, home values in the area tend to skyrocket. Pockets of the country where tech is expanding, such as New York, Los Angeles, and Austin, have already and will continue to feel the effects of increasing real estate costs.
The tax plan
The US government passed new tax reform legislation in late December 2017, which will have a definite impact on the real estate market in 2018.
Different features of the bill will have different effects. For instance, homeowners in the most expensive markets will be hardest hit by the bill at first, followed by all homeowners across the country when many deduction caps will not rise with inflation. The bill reduces mortgage interest deductions from a $1 million cap to $750,000 for first or second homes, so those looking to buy in expensive markets will experience tax disincentives to do so. This will make sellers in those markets face an uphill battle.
The bill places a property tax deduction cap at $10,000, compared to the previous unlimited cap. This will affect homeowners in high-tax states like New York, California, and New Jersey.
Furthermore, the National Association of Realtors (NAR) has predicted that the new bill could lower home prices by up to 10% in each state.
Given the bill’s variable effects on buyers and sellers across the country, see here for a longer guide to what you need to know about the tax legislation’s impact on real estate.
New construction trends
In 2018, new technologies in construction will affect the nature of the real estate market. For example, real estate will incorporate smart building technology that adds comfort and access to commercial and residential buildings. Interest in smart-home automation will grow in 2018, meaning that buyers increasingly want their in-home systems such as lighting, climate, entertainment, appliances, and even security to be automated.
Green technology and sustainable development will also become increasingly important to real estate. Not only is sustainability a value among home buyers, but it also makes financial sense to create energy-efficient buildings. Furthermore, in the wake of several national disasters that destroyed homes in 2017, there is a renewed focus on environmental resilience in home construction.
As the real estate market changes, new trends will continue to emerge. See here for the latest in real estate news, themes, and topics.