With this year coming to a close, there were many moments of major advancements in technology through out the year that are finding their way into our real estate world.
Things such as artificial intelligence, cyber currencies, cognitive augmentation — to name a few — have begin to pop up this year, and they are here to stay. Below, you’ll find my predictions on what else we may be seeing in 2018!
1. The largest home purchase deals will be done in crypto currency.
In 2018, we will see the largest purchase to date using this currency. Although we are years away from this being common place entirely (if ever), this year will bring about a number of transactions that we will see media coverage on.
J Kuper at Sotheby’s International Realty in Austin, Texas, just brokered a deal where his buyer purchased a home using cryptocurrency. I am sure we will see more purchases in 2018, including the largest to date.
2. New construction model homes will utilize technologies like Amazon’s ‘Alexa’ for interactive information exchanges.
Imagine this: you are showing your clients a model home for a new home community in your marketplace. You have passed through the sales center and just stepped into the first of three different model homes.
The last thing the onsite sales agent says to you as you leave before heading to the model homes is, “We have ‘Alexa’ in each model. Go ahead and ask ‘Alexa’ anything about the home!”
You next step into the model home with your clients, and your clients ask you what brand of hardwood flooring is in the entryway. You say, “’Alexa,’ what hardwood flooring product is this?” And Alexa tells you all about the homes.
3. Condos will make a huge comeback in 2018.
With most major metro cities experiencing a vertical boom in downtown cores, this is introducing thousands of well-heeled, upwardly mobile, equity gain-seeking millennials who are paying rents that look like and resemble mortgage payments, yet there is no product they can buy currently.
Locally in my city, Seattle, our condo market has missed an entire (construction) cycle, and we are playing some major catch up. Expect to see numerous announcements from developers in 2018 about upcoming condo projects getting vertical in a city near you.
4. Baby boomers will migrate south to resort home communities and free up inventory.
Expect to see slight inventory increase coupled with increased sales in resort home communities. With the U.S. real estate market now surpassing pre-recession levels in most major metro markets across the country, baby boomers have seen their home values rise. And with deprived inventory, there hasn’t been a better time to sell in the past 10 years.
Boomers who own real estate portfolios that haven’t performed too badly will most likely cash out to assist in a cash purchase.
I think this will bring about a rise in inventory for most major markets as well as bring an influx of buyers to warm and sunny markets in and out of the U.S., markets where flip flops are worn daily such as Palm Springs, Scottsdale and West Palm Beach.
I also predict an expected rise in purchases in sunny warm places south of the border in beautiful locations such as Los Cabo’s and the newly christened, Danzante Bay community at Loreto Islands (Baja).
5. Tax law changes will cause a small exodus from high SALT tax locations.
The tax law changes are coming. Don’t be scared though. The big-picture perspective is that, on the margin, the tax law changes are going to be somewhat significant: bad for high state and local tax (SALT) locations and good for low SALT locations.
And they are going to be good for businesses and business owners (and hopefully those who the money trickles down to, like real estate agents), so those businesses in low SALT states will get a double benefit.
Some buyers may consider a move to other states though. Nothing wild, but anticipate a migration of 1 percent to 2.5 percent of high-tax filers from states like California, New York, Connecticut, Massachusetts and Virginia to lower-burden states like Washington State (shoutout to my state!)
6. Buyers will choose to purchase new construction pre-sale homes rather than competing against multiple offers on resale homes.
It is no secret that new construction pre-sale homes are easier to purchase in an inventory deprived market. Buyers who are not being represented by savvy agents are not winning in multiple offer situations.
I have seen it time and time again this year (2017), and I have heard the war stories around the office of buyers falling in love with their dream home only to submit the offer and find out they lost to a competitive bid.
Higher than list purchase prices, releasing earnest money, waiving all contingencies and surrendering their first born child — not all buyers are comfortable doing what it takes to “win” the home.
Here in Seattle with the ultra-competitive market, buyers are choosing to purchase a pre-sale home. With the six-month duration it takes to build, most buyers are seeing a rise in value from offer date to closing date with instant equity.
7. Buying a home in 2018 will prove a better financial decision than renting.
Agents are always about informing clients that now is the best time to buy — no matter what market, no matter what city.
In 2018, I predict we will see an increase in renters turning into buyers. Buying a home can actually make more sense in most major metro cities, especially those experiencing unprecedented gains such as Seattle.
We saw this trend begin in 2016 in my city and gain momentum through 2017. This is mainly because the market is appreciating faster than most consumers can save, so the notion of renting and building up a larger down payment to buy a home in a couple of years may not make sense as it did in the past.
We are in a very special market, and savvy consumers should take advantage of these unique conditions while they can. There are many qualified buyers who are renting, and it’s always easier to stay put and sign another lease, but deferring a purchase by even a year could mean the loss of tens of thousands of dollars when factoring income taxes and potential capital gains.
8. 2018 is the year agents will incorporate artificial intelligence (AI) in their business plans.
AI will prove to aid agents in data base maintenance, drilling down on providing data to agents on when the best time to connect with clients is, scraping social media platforms to gather relevant information and much more.
One way I predict AI will begin to integrate as as an aid into an agent’s business will be via CRMs. Although the best CRM is the one you use, in actuality, it may not be.
In fact, there may be better ones that you are not using but perhaps you should be, and one that incorporates AI could be the best version for you!
9. We’ll see more cognitive technologies in the home.
Anyone remember “The Clapper”? And how about that annoying jingle: “clap on, clap off, The Clapper!” I can still hear it today (shoutout to other ’80s kids!)
I don’t predict “clappers” in homes in 2018, but I do predict cognitive tech. The remarkable thing is that cognitive technology is picking up kinda where “The Clapper” left off.
But now you can just speak it, “kitchen lights off” or “pre-heat oven to 375 degrees,” and not have to get up from that sectional sofa.
10. Amazon and Google will really get into the real estate game.
Amazon is getting into everything. I expect to see other players enter the space to compete with Zillow in delivering real estate data to consumers.
You may have seen a story that first broke on Inman back in July, about a page on Amazon’s website that read “Hire a Realtor” somewhat hidden within the site.
While it appears it is strictly a referral service, I would not doubt it one bit if Amazon has plans to enter the real estate game in some capacity. And why not? It just bought a grocery store and now is wanting/asking/begging to be invited into your living room.
Time will tell which of my predictions will come through in 2018, but one thing is for sure: the market will continue to be hot for sellers, and it will continue to be a great time to be a real estate agent.