Real estate experts see massive amounts of change — some exciting and some challenging — coming to the industry in the decades ahead.
But while 2020 may look a bit like 2019 on steroids, the longer-term future is less certain. What happens to real estate technology, for example, after five or ten more years of massive venture capital investment? Where will agent ranks end up as consumers have access to more tools and more information?
No one has a crystal ball, but to get a sense of what’s coming over the next decade, Inman reached out to a handful of industry players, executives and observers. And while they had different takes, what’s clear is that the next decade will likely be defined by massive change.
Here are some of the big trends industry observers identified.
2020: The housing market will stay strong
First the good, and more certain, news: Next year is likely to see 2019’s relatively healthy housing market continue. That’s according to a recent report from Zillow, which indicates that 2020 will likely see low mortgage rates and high buyer demand — both of which trends dominated 2019 as well.
Skylar Olsen, Zillow’s director of economic research, said that 2020 could see slower growth, but still advised industry observers to not “mistake this for a buyer-friendly environment – consumers will continue to absorb available inventory and the market will remain competitive in much of the country.”
Numerous economists largely agreed. For example George Ratiu, realtor.com’s chief economist, has predicted “robust” buyer demand in 2020.
And Mark Fleming, chief economist for insurance and financial services company First American, said this month that “low rates are increasing buying power significantly.”
Frederick Peters, CEO of Warburg Realty, also agreed that the market should remain generally strong in the near future. Though he told Inman that while his hometown of New York City has seen something of a downturn in real estate during recent years, he believes that broader fears about a recession — fears that were common earlier this year — are unfounded.
“Realistically I’m not seeing anything that looks like a recession on the horizon,” he said.
These conditions will pose a challenge to some buyers who are facing supply shortages, and consequently increasing prices, with Redfin predicting for example that bidding wars will return next year.
But it’s worth keeping in mind that one year ago at this time there was speculation that some sort of downturn was on the horizon. By comparison, then, predictions about a robust market in 2020 are generally good news for real estate professionals.
2020: Homeowner demographics will evolve
Zillow’s report also notes that as Millennials — or, generally people born in the early 1980s through mid 1990s — hit their prime homebuying age they will continue to drive housing trends in the coming year. That should lead to increased interest in smaller houses that are more affordable.
Redfin also pointed out in its report that the coming years should see Hispanic Americans gain more home equity than white Americans for the first time ever. The online brokerage additionally notes that home values in Hispanic neighborhoods are growing faster than in white neighborhoods, and that these gains in home equity should benefit families for generations.
2020: Smaller cities will boom
All that price growth, as well as low interest rates, are creating a wave of demand that coastal superstar cities in some cases just can’t meet. As a result, secondary cities — some in so-called “fly over states” — should see continued increasing demand.
A recent report from the National Association of Realtors (NAR), for example, identifies cities in Utah, Nevada, Ohio, Florida and the Carolinas should stand out in the coming years. Cities in these markets generally benefit from strong economies and comparatively lower housing costs, though they too could end up seeing the kind of price inflation that has bedeviled bigger metros if they don’t add enough supply.
This shift toward secondary cities has been ongoing for some time now, and the NAR report notes that the trend won’t be limited to next year. But it’s still significant that the U.S. is currently seeing — and will in 2020 continue seeing — a pattern of migration to smaller and more affordable metros.
2020: Climate change will be a bigger deal
A number of observers (including Inman founder Brad Inman) believe that these issues could become even worse in 2020. Redfin, for example, predicts that next year “homebuyers and sellers will take the consequences of climate change into account when deciding to buy.”
Probably the biggest climate-related policy question for 2020 has to do with flood insurance. Currently, most Americans with flood insurance get their policies through a federal system known as the National Flood Insurance Program (NFIP). And because flood insurance is generally required for anyone wanting a mortgage on a home in a flood zone, the program is popular.
However, it has also been plagued by problems, including billions in debt, and is the subject of ongoing reform efforts. The reforms are poised to change the way people pay for flood insurance, charging homeowners more for higher-risk properties and less for houses located further from the most dangerous areas.
Work on the program has been ongoing for years, but Larry Larson — an engineer, policy advisor and founding member of the Association of State Floodplain Managers — told Inman that lawmakers have postponed a decision until after the 2020 election.
That means next year could see the first major breakthrough on the issue in years, though its also possible that some resolution could come further down the road.
Either way, though, the near-term future is likely to see climate change playing a larger and larger role in the real estate industry. Peters told Inman that the issue is already “creeping into the consciousness” of buyers and sellers, and added that he “strongly believes” it’ll become more important in coming years.
2025: Agent ranks will shrink
Russ Cofano, the former president of eXp World Holdings, believes that the number of real estate agents in the U.S. is currently at or around its peak. However, in the coming years, greater disruption and innovation will give consumers more choices.
And with a more diverse real estate service landscape, agents themselves will have to step up their game.
Some agents, Cofano argued, will succeed and continue to thrive. But over the next five years many will not.