By the Experts at BoomTown
The countdown to 2020 is officially on! We're taking a look back at some interesting patterns from 2019 and discussing our top picks for real estate trends to look out for next year.
1. Generational Shifts: "Silver Tsunami" + Welcome Gen Z
As millions of aging Americans enter their 60s and 70s, there is potential for a variety of impacts on the housing market in the coming years. Senior housing demands often mean downsizing and cost saving, so the market could see higher demand for smaller, more affordable inventory. Because inventory of these smaller one-level homes is limited across the board in the U.S., competition could increase. If you live in a popular retirement city (like Florida or Arizona), it's even more important to be aware of this influx of retirees and what that means for real estate.
It's also time to say hello to Generation Z. According to a TransUnion report, the number of Gen Z shoppers who took out a mortgage more than doubled in one year. Year-over-year growth was 112 percent in comparison to 12 percent growth from millennials. It's important to consider what the profile of a Gen Z homebuyer looks like. Similar to millennials, they are riddled with student debt. That means smaller spaces and affordability are key. In combination with the millennial market and the Silver Tsunami, it's easy to see why experts are predicting more of a demand for affordable inventory that is both senior- and starter home-friendly.
2. Recession: Facts and Fears
Some experts predict that a recession will hit the U.S. economy around 2020-2021; however, this time around, the housing market is not the cause, and there's a good chance that it won't be hit as hard as other sectors in the economy. Because of some positive signs such as a low unemployment rate, stricter Fed lending policy and steady/increased housing prices, many experts believe that real estate is actually moving towards a more balanced market. The most optimistic predictions lean towards a smooth descent into a balanced market, rather than a crash.
However, it's important to be cautiously optimistic (and prepared). Recession fears, whether they're warranted or not, could lead to seller hesitation. Seller hesitation could exacerbate an already low-inventory market, with first-time buyers wanting to snap up good deals, but sellers wanting to wait until prices rise.
3. Return of the Suburb
Census data is showing that the "back to the city" trend of the early 2010s is shifting. City population growth has declined while suburban growth has increased. The move towards suburbia could be caused in part by the tapering of the Great Recession, allowing mobility (particularly for millennials) and the ability to purchase homes.
Because millennials are now having children, the rise of suburbia makes sense. They want the stability and affordability of what the suburbs offer; however, they still want some of the city-like amenities they've grown accustomed to. And so, the term "hipsturbia" was born. Essentially, it means "cool" suburban communities that are more walkable, accessible and fun. We're seeing the trend grow in smaller communities outside of New York City and in suburbs of Los Angeles and San Francisco.
4. The Rise of the iBuyer
The iBuyer conversation is not dying down. In fact, it's exploding on the cusp of 2020, with Zillow announcing its plans to expand its iBuyer program in six new markets, and Offerpad raising enough capital to double their cities served in 2019 and again in 2020.
It's the No. 1 trend in real estate you can't afford to ignore.
So far, we know that most markets with iBuyer activity are in a median price range of $200,000-$300,000. This seems to be the sweet spot for iBuyer demand; however, the influence is expanding, faster than many predicted, so we'll have to stay tuned and keep an eye on how these companies perform in different, more expensive markets.
So, what does this mean for agents? You need to start thinking about your answer to this consumer demand (because clearly there is one). The debate is on in the real estate community, with many arguing that you "get on board or get left behind" and building their own iBuyer programs. Keller Williams has jumped on the iBuyer train, launching Keller Offers in the summer of 2019. We believe being transparent about clients' options from the very beginning and helping them make the best possible choice is essential for being a successful agent.
5. Technology Gives the Edge
If the last trend about iBuyers tells us anything, competition is fierce. Based on our experience working with real estate top producers for 11-plus years, we know that technology is critical for building an evergreen/lasting business. Building a tech stack that supports and empowers your business will give you the competitive edge you need. That means finding tools that integrate with one another, deliver ROI and allow you to focus your energy on more dollar-productive activities.
Consider this: Would you rather spend your time manually sending listings to new leads or have a system that automates personalized eAlerts and nurture campaigns? Would you rather spend your time responding to and qualifying a new lead that registered on your site, or work with a company that handles lead qualification for you? Ready to grow your business? Click here to see BoomTown in action.