Pricewaterhouse Cooper (PwC), in partnership with the Urban Land Institute, recently released the annual Emerging Trends in Real Estate® report to highlight what investors and developers can anticipate in the year to come. Last year, the report predicted that more Millennials would be looking to suburbs for homes and there would be a large push for more urban agriculture and alternative housing projects. This year's predictions build on the previous ones and look to the future for the next phase of real estate.
1. A KINDER REAL ESTATE MARKET
Several markets across the country, especially Colorado Springs, experienced record-breaking transactions this year in terms of volume and prices. While the markets continue to shock and impress, there is very little data to suggest that it will overheat in 2017. Although new-home developers are working as fast as they can to keep up with demand, many are having difficulty securing adequate financing to move ahead with projects. While it might sound like a drawback, the report suggests that the limited supply of new construction homes is one of the biggest factors in ensuring the market doesn’t become too heated, which would likely lead to another collapse.
2. MORE MULTI-USE OPTIONS
This trend mostly pertains to commercial real estate, but it’s still an intriguing concept for all types of real estate. Properties that have the potential to be used for a variety of needs will be more valuable than those with specific purposes will. For example, some buildings are developed for just one type of user. However, urban units with the potential to be used on an as-needed basis could appeal to a larger pool of users. For users, they can pay for exactly the amount of space they need –no more, no less. Meanwhile, the building owners have the option to backfill any unused space with other users.
3. SCARCITY OF SKILLED WORKERS WILL BUMP CONSTRUCTION COSTS
We’re at a precarious point where baby boomers are looking to retire, but there simply aren’t enough Millennials to fill the positions they’re leaving behind. The report explains that there are currently 3.2 million Americans in their prime, early-working years, whereas there are 9.4 million who are set to exit the workforce in the next few years. Also, more young people are opting for a higher education, which is keeping them out of the workforce for longer. This labor shortage will undoubtedly affect the real estate market.
4. HOUSING AFFORDABILITY
Housing affordability is considered to be one of the most important problems of our time, but 2017 could be the defining year of change. The report outlines that there are two types of affordability: big-A and small-A. Small-A refers to low-income families that struggle with the ability to afford basic housing, whereas big-A refers the middle-income families who have a home but also spend so much on their monthly housing bills that they too feel the pressure each month to scrape by. The report suggests that we’ll likely be seeing more assistance from local governments in terms of financial assistance and better planning to help everyone in these two categories gain better housing stability.
5. PERSPECTIVES MUST FACILITATE CHANGE
When dealing with fundamental issues such as housing, jobs, and policy, there’s never a solution that will satisfy everyone. One of the issues outlined in the report is that areas with a large income gap, like San Francisco and New York, making them exclusive to only the elite. But the question is, at what cost? What is being lost in terms of culture and diversity if the status quo is maintained?
6. CONNECTEDNESS OF CITIES
Modern urban planning practices attempt to pull people together again through thoughtful community design. Emerging tech enhancements are making cities even more interconnected than ever. Some of the most interconnected cities, like San Francisco, Chicago, and New York, collect data from various sensors in their roadways, power grids, buildings, and more, to create patterns to help them better serve their residents. Wearable tech devices are seen less as a luxury, but more of a necessity, that maintain health and safety. The more data they collect, the better the city can plan for the future needs of its residents.
7. COMPANIES LOOK TO GIVE BACK TO THEIR SURROUNDINGS
More consumers are more concerned with a company’s ethical and environmental footprint than ever before, which is changing the way that many large organizations do business in their area. The report describes that a new breed of CEOs is concerned with a triple bottom line, which includes social and environmental success as well as financial. By doing so, they’re shaping the areas around them and giving back where they work. This can include revitalizing a corridor, creating more park space, and providing funding local improvement initiatives.
8. IT’S TIME FOR SMALL DEVELOPERS TO SHINE
Small developers make up a considerable portion of the new construction industry, but it’s often hard for them to secure capital for their projects because of their size. Lenders are much more willing to give capital funding to larger, more well-established builders as they’re thought to come with lesser risk. However, small developers can bring fresh ideas and are capable of addressing different needs that larger development firms tend not to focus on, such as infill properties.
9. AUGMENTED REALITY MAY CHANGE HOW WE INTERACT WITH LISTINGS
This year, Pokemon Go took the world by storm. In the real estate industry, people were setting up virtual incentives in open houses and active listings to help improve their exposure – and it was fun! The big question that many big brokerages are thinking about is, how can this technology be used in the real estate industry? The report explains how property viewings could be revolutionized by this technology. Want to view a property during the day and at night, or make on-the-fly enhancements? Virtual reality could do that, and more.
10. BLOCKCHAIN: THE FUTURE OF REAL ESTATE DATA
Blockchain is currently the record-keeping technology used by Bitcoin to secure and solidify their digital data. It’s thought to be ideal for valuable assets because it creates a tamper-proof record of a transaction. The report outlines that some financial firms are already looking into adapting this technology to their needs, and several more could be joining the crusade for secure data.
Focused on Northern Michigan Investment Real Estate
Brook is focused on lifestyle real estate investment properties as most people want a vacation home to make lifelong memories that endure for their entire family, leave a profound legacy for generations, and they want a solid financial investment at the same time. While the area does have many good realtors, there aren’t many with the unique financial, vacation home investing, and technology marketing background. Brook uses his diverse skill set to help clients properly evaluate and determine whether a vacation home makes financial sense.
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