Real Estate Trends

A real estate trend is defined as any continuous change or pattern observed in the real estate industry, which leads to a statistically significant change over time. A trend may be caused by economic performance, changes in mortgage rates, consumer forecasts or other essential or non-essential reasons.

Typical Trends And Their Causes

During the course of a nation’s fiscal year, the real estate market will take a lot of hits based on the overall economic condition or the influence of foreign markets. Trends can sway both positively or negatively depending on the general market tide. The following are some examples of real estate trends.

Declining Property Values (As Opposed To Rising)

The value of a property may decline for various reasons. If people lose confidence in the strength of their economy, it can affect their purchase behaviour. Such uncertainties lead to market stagnancy. To encourage purchase, sellers may be forced to reduce the price of housing.

Another reason for declining property values could be currency strength. Following the result of the Brexit polls in 2016, the British Sterling dropped significantly, and the ripple effect led to a reduction in housing costs. Domestically, certain activities may affect the housing prices in an area. The development of a noisy airport, a road construction that obstructs movement or increased crime rate in a neighbourhood can cause prices to fall.

Rising Property Values

Property values may rise when buyer confidence and purchasing power is high. If people are generally feeling optimistic and have the funds, it may lead to an increase in demand which can automatically raise house costs. Foreign buyers have also been known to impact the price of real estate. In 2016, Vancouver experienced a tremendous rise in home valuation due to the influx of wealthy Chinese property investors. The government was eventually forced to implement a tax to cool the market.

Development could also cause the value of a locality to rise. For example, the erection of major urban buildings or an industrial plant could attract home-seekers or professionals to the area. This gentrification automatically raises the value of property in that area. Scarcity can also lead to high valuation because buyers tend to be less price sensitive when there are limited options.

Growth Of Buyer Agencies

There was a time all real estate agents or firms worked as a single agency. They either represented only the seller or the buyer. In the 1990s, buyer agencies became a real estate trend. This meant a customer could retain a real estate agent who would represent their best interests alone.

The pioneer of this concept in the U.S. was The Buyer’s Agent Inc. It is recorded that before that time, a real estate broker was presumed by State law to be representing the seller alone. It was also documented that buyers who used buyer agents were able to save up to $5,000 in home costs than other customers who worked without representation. This trend has become a more permanent feature of real estate practices.

Marketing Trends

The advent of the internet and mobile platforms have significantly influenced the way real estate firms generate customer leads. It has eclipsed the use of local newspapers, property magazines and other alternative sources as the preferred source of property information by potential buyers/sellers. Today, a huge majority (over 87%) of new home buyers in America admit to using the internet as an information source. The study carried out by the National Association of Realtors (NAR) reports that a third of buyers said they found out about their new home via online sources.

Websites such as Gumtree and Zoopla in the UK, Daft.ie in Ireland and Craigslist in the U.S., are go-to sources of property information for buyers and sellers in the 21st century. This trend has caused the respective governments to add new regulations for marketing real estate on the internet.

Emerging Marketing Trends In 2017

With new developments in real estate, PricewaterhouseCoopers (PWC) reported the following emerging market trends for 2017:

  • A gentler real estate cycle

The fundamentals of real estate continue to improve gradually, the volume of transactions and prices are returning to their characteristic high levels. In spite of the current length of the real estate market expansion, the number of new supply levels remains low. It is possible that this is one of the first moderate real estate cycles to come.

  • Optionality

On both sides of the market, (the user and investor sides) optionality, which is the multiple use, by users, and user profiles is becoming a common way to traverse the cross-currents of unstable markets.

  • Impact of scarcity of labour on the cost of construction

Due to the global financial crisis, many workers left the construction industry. However, these workers have gradually begun to return following the recovery of the economy. In spite of this, there remains a shortage in the industry which is affecting project deadlines and driving up costs.

  • Affordability of housing

Two new categories have arisen in the conversation of housing affordability; they are affordability with a small “a” and Affordability with a Big “A”. While the former (small a) refers to housing for middle-income households, the latter (large A) is used to describe low-income households.

  • A city connected

There is a noticeable emergence of smart cities that leverage technological growth to attract investors’ interest. The residents of these cities use their knowledge of modern technology to drive economic growth and lure property investors.

  • Transformation through choice of location

Nowadays, business owners are converting global economic growth towards positive outcomes and significantly impacting localities and cities in the process.

  • The growing role of the entrepreneurial developer

In the past, major building developments were carried out by established agencies alone. Now more individual developers are taking control of their own developmental projects. New reports show that small and medium scale developers are becoming a force to reckon with.

  • Introduction of Blockchain

Blockchain is a technology designed for record-keeping, and it functions as an encrypted register for storing digital information. There are indications that it has the potential to disrupt the real estate technology scene.

Published on 4th July 2017

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