These five threats could pose some problems for the real estate industry in 2019.
It’s often said that real estate is the safest investment you can make. While this holds true a lot of the time, the real estate market is not without its risks. Aside from the historical collapses we’ve seen in years past, there are always lesser issues that pose threats to home buyers and sellers on an individual basis year after year. Knowing what’s coming and how to prepare for it is a major key in staying afloat when these threats come to sink your business. Here we’ll discuss a few of the biggest threats to the real estate industry in 2019 according to the Counselors of Real Estate (CRE).
Aside from the historical collapses we’ve seen in years past, there are always lesser issues that pose threats to home buyers and sellers on an individual basis year after year.
1. Interests rates and the economy
As interest rates continue to rise, expect to see several changes in commercial and residential real estate markets. Be on the lookout for decreased demand for commercial property and higher mortgage rates. The increase in rates is making homes less affordable and also limiting the value appreciation for commercial real estate. All in all, the harder it is to buy a home, the harder it is for real estate agents to do business. However, experts don’t expect interest rates to decline any time soon, so you may be able to convince potential clients that now is their best chance.
2. Affordability
As I mentioned before, there is a lack of affordable homes in all income brackets, excluding the most wealthy. This is being caused by low wages, rising rates, low supply, and high demand. In the most competitive housing market we’ve ever seen, the best way to bring home prices down is to build more of them. Many potential home buyers may opt for renting. But you would be smart to advise them that buying a home is the better long-term investment.
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3. Immigration
Believe it or not, immigration truly has a profound effect on the housing market. When it’s restricted by law, it has a negative impact on new housing starts and home purchases. It also adds to the current shortage of skilled laborers in the United States. Many immigrants to the U.S find work in construction. And when there are fewer immigrants, the labor pool decreases, causing homes to be built at a slower pace.
4. Politics
What goes on in politics will always have a ripple effect on what goes on in real estate. Certain tax reforms and policies are aimed at balancing trade with other countries. These could have an indirect effect on domestic jobs, incomes, and properties. However, new bank policy changes regulating community banks and relaxing Dodd-Frank Act requirements could have more direct implications for real estate agents.
5. Technology
New technology has begun to take over several sectors of business, and the real estate industry’s time is coming soon. From e-commerce in the retail sector to the digital mortgage, tech is already making a splash in the real estate market. As owners and investors move to adopt these new technologies, it’s important to decide which tools are most appropriate for their business and not rush toward “technology for technology’s sake.”
What threats to real estate are you anticipating in 2019? Share them with us on social media.
