Home prices are up, the stock market keeps hitting all-time highs and consumer confidence has soared. On the other hand, we’ve been rattled a year of unprecedented natural disasters, growing divisiveness and an on-going inventory shortage.
What will happen in 2018?
Taking a cue from Brad Inman’s top 10 predictions for 2018, here’s my take on what to expect next year. (By the way, I fancifully speculated that Trump could win the White House in September 2015, four months before Brad Inman did.)
Prediction 1: WomanUP!
In early 2017, the California Association of Realtors (CAR) discovered that only 14 of the top 100 brokerages in California were run by women.
CAR set about remedying this situation by launching its Women’s Initiative that included its day-long WomanUP! conference this past June.
Look for this initiative to become a major force in the industry during 2018 as CAR releases the white paper on its research, launches a national mentoring initiative and holds more WomanUP! events including one at Inman Connect in New York.
(Full disclosure: I’ve worked with this initiative on research and the white paper, and my new company will handle the training and consulting side of the business; I’m working in concert with them, though separately with similar goals in mind on upcoming projects including the launch of BrokerageUp!, a training and consulting company that will launch in January.)
Prediction 2: Credit unions and local lenders
Dodd-Frank dramatically increased the cost of compliance for mortgages, forcing many credit unions and local banks out of business.
Trump wants eliminate Dodd-Frank’s onerous credit requirements. Look for Congress to back him up, creating a new heyday for credit unions and local lenders.
Prediction 3: ‘Surban’ properties
John Burns, the author of Big Shifts Ahead: Demographic Clarity For Business, coined a new term, “surban” to describe a suburban area that has the feel of urban, with walkability to great retail from a house or apartment.
In contrast with McMansions that receive 12 percent to 45 percent less views on realtor.com and take 73 percent longer to sell, surban properties will garner premium prices as millennials seek the benefits of an urban lifestyle, coupled with their need access to family housing and good schools as they marry and have children.
Prediction 4: Younger millennials and Gen Z become ‘Gen Buy’
Unlike the millennials who graduated from college prior to 2012, those graduating after that date are finding jobs right out of college.
The result is they’re paying off their student loans and putting aside money for a down payment.
In 2018, look for older millennials to lag behind as “Gen Rent,” while the younger millennials and Gen Z transform into “Gen Buy.”
Prediction 5: Polarization of the real estate industry
Brokerages, MLSs, tech companies — everyone seems to be consolidating.
On the other hand, boutique brokerages and agent teams are growing exponentially. The real estate market is polarizing: big brokerages versus boutique brokers and agent teams; do-it-your-selfers and iBuyers versus high-touch, high-value brokerages; big tech players versus “new kids” startups.
Look for this trend to continue in 2018, with mid-sized players taking it on the chin as they struggle to gain and retain market share.
Prediction 6: Early artificial intelligence (AI) and predictive analytics adopters rule the market
Next year, we will see top producers and other early adopters embracing chatbot technologies that instantly convert online leads into appointments (Automabots, Holmes and Roof Ai), lifestyle search with over 100 different factors and next-gen CMA tools decimate competitors who lack these tools.
Those who will garner the greatest success will marry these tech tools with high-touch and concierge level client services.
Prediction 7: Independent contractor laws bring the current agent team model crashing down
Although real estate law requires the “designated broker” to supervise his or her agents (in direct conflict with the independent contractor (IC) laws that prohibit supervision), there is nothing in the real estate law that allows an IC agent leading a team to supervise another (IC) agent.
Currently, ClassAction.com has identified real estate as having a “disproportionately high” number of misclassifications of independent contractors.
It is actively seeking members for a class action suit in real estate. If the suit succeeds, the rampant violations of independent contractor laws among agent teams could bring down not only those teams but also the brokerages who were responsible for overseeing those teams as well.
Prediction 8: Residents of high-tax states exit causing a downward spiral
If the new tax bill becomes law, the exodus from California, Illinois, New Jersey and New York to lower tax states will increase substantially.
In 2018, these states will see a flattening or decline in prices, especially in the luxury markets as high-wealth individuals leave.
Revenue declines will rattle state governments, leading to more taxes and/or fewer services. Ultimately, this will create a downward spiral that may cause even more people to leave.
Prediction 9: Disaster-related demographic shifts
The unprecedented natural disasters have led to some major demographic shifts; according to the Tampa Bay Times some 130,000 Puerto Ricans have already arrived in Florida.
“Experts at the Center for Puerto Rican Studies at Hunter College in New York estimate that more than 300,000 Puerto Ricans could leave the island in the next two years, and Florida would likely attract many of those,” the Tampa Bay Times wrote.
If this group tilts Democratic, Florida may shift from red to blue, possibly shaking up the 2018 midterm elections and most certainly the presidential election in 2020.
Prediction 10: The biggest shakeup in 2018?
As bad as the California fires have been, the most catastrophic shakeup would be a major earthquake along the West Coast. My gut’s telling me something’s got to give soon, and here’s why.
Alaska, Asia, New Zealand, South America and Mexico — the Ring of Fire has been experiencing massive earthquakes of 7 magnitude or higher over the past couple of years.
The West Coast is the only area that has been quiet and is long overdue for “the big one.” As Thomas Jordan, the director of the Southern California Earthquake Center observed, “The southern part of the San Andreas looks like it’s locked, loaded and ready to go.”
Second, the San Andreas fault averages a major quake every 160 years. The last major quake was in 1690, 327 years ago.
When the quake does occur in Los Angeles, losses could exceed $300 billion and create a supply-chain nightmare for business.
This pales in comparison to what could happen off the coast of Oregon and Washington, where the Cascadia Subduction Zone could trigger a 9 magnitude quake (33 times stronger than the San Andreas) while also unleashing catastrophic tsunamis across the entire Pacific Ocean.
Either of these events would decimate the economies in these states and most likely trigger a major economic and real estate downturn.
To sum up, I’m all-in on the accuracy of predictions 1-6 and hoping that I’m wrong about any damaging shakeups of 2018.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. Learn about her training programs at www.RealEstateCoach.com/AgentTraining and