Radical financial market shifts, rapid technological advancements, and dramatically changing demographics – the global real estate market is in constant influx. With the advent of 2018, we are seeing forecasts of new trends that are likely to influence seller and buyer behaviors. According to the latest report by Realtor.com, the buying power of homebuyers will be stronger in 2018 as the housing supply is expected to catch up with the demand.
Real estate agents and companies are reflecting upon the failures and successes of 2017, and thinking of innovative ways to effectively cater to the evolving demands, in order to gain a competitive edge. Whether it is a seller looking to get a high price for their property or a buyer searching for an affordable home, you must stay up-to-date with the emerging trends that are likely to dominate 2018.
Here are the top five trends that will shape the real estate industry during this year:
1. BITCOIN TO CREEP FURTHER INTO THE MARKET
During the past few years, we have seen many people sell their property for Bitcoin instead of real cash. Just recently, a $23 million mansion in London was put on sale to be bought with only Bitcoin. In 2018, this mode of payment is expected to gain ground, as more and more sellers are considering Bitcoin to be a profitable investment vehicle, and its value is expected to break all records in the coming years.
The driving force behind Bitcoin is blockchain technology that has already attracted the attention of large banks and other financial institutions across the globe. The International Blockchain Real Estate Association is working towards integrating blockchain technology into real estate transactions to make the entire process more transparent. This technology can be used for preventing fraud, checking property history, ensuring clean titles, establishing contracts, and lowering ancillary costs associated with brokers, government databases, and title companies.
It is estimated that Bitcoin will stabilize and further rise in value during 2018, giving sellers more reason to put their property on sale in exchange for digital currency. However, some experts have forecasted a dramatic crash before the digital currency finally drifts on the upward trajectory.
2. MILLENNIALS WILL STEP UP THEIR BUYING GAME
Continuing the trend from the last year, generation Y will capture the largest portion of the buyer’s market. According to a recent report, by the end of 2018, Millennials are likely to make up about 43 percent of homebuyers. Since Millennials are now in their late 20s or early 30s, they are planning either to start a family or move into a new home. This is because they are experiencing income growth and gaining stability in employment, allowing them to afford mortgage. Additionally, a majority of these Millennials are going to be first-time buyers.
Millennials are expected to prefer moving to suburban areas because the continued trend of increasing home prices – which is a result of a lack of affordable homes in the real estate market. With expanding families and need for better, spacious homes, they have to turn to secondary markets and suburbs for better quality of life and affordability.
3. EVOLUTION OF OFFICE AND COMMERCIAL SPACES
With cutthroat competition in every industry and business sector, offices and employees are facing crushing pressure to step up productivity to meet customer demand and capture the maximum market share. To foster growth and success, commercial property owners and developers must focus on designing properties with not only ample space and modern facilities, but also where an interactive, positive environment can be established.
Today’s offices are anything but mundane and bland. With office designs changing into mixed workspaces to drive innovation and creativity, more and more organizations have curated workspaces for employees in a way that they create a relaxed environment to boost productivity. In 2018, developers will focus on efficiency and market design, and construct customized office spaces to support the evolving workplace trends. Smart, green, flexible, and creative are going to be the keywords for office space designs during this year.
4. GEN Z TO JOIN THE RANKS
We have been hearing about Millennials taking the real estate market by storm for several years now. In 2018, the story is going to be a bit different, as a new demographic is emerging and preparing to disrupt the market. Gen Z – the successors of Millennials – refers to the generation born between 1995 and 2001, and in their early 20s or just bidding farewell to their teenage years. According to a recent study, Generation Z is predicted to hit the 2.5 billion worldwide mark by 2020.
Gen Z is gaining influence rapidly, as a sizable proportion has just completed college and now looking for job prospects, following the footsteps of Millennials. They will exert great consumer power over industries and brands, and are likely to enter the post-college housing market. Considering the inclination towards a more urban lifestyle and highly individualized preferences, this rising demographic can prove to be a wild card of the industry.
Just like generation Y, the latest cohort is going to have a great impact on retail – the only difference is that the shopping experiences will be complimented by social and web platforms. This puts mounting pressure on retail landlords and retailers to create experiential stores that account for individual preferences of generation Z.
5. TECH-ORIENTED REAL ESTATE OPTIONS
Buyers and sellers will continue to benefit from modern real estate technology that has been saving thousands of dollars on agent fees. Startups, like OpenDoor and TruPlace, have come up with ways to bypass real estate agents, allowing both buyers and sellers to save money. About 5 to 6 percent of the transactional value of a home goes into agent fees. For example, a house worth $300,000 can lead you to put around $15,000 to $18,000 in a real estate agent’s pocket, per transaction. Additionally, blockchain technology is going to further streamline the process and cut out the need for middlemen, thanks to smart contracts.
It seems like technology and modernization are going to dominate the real estate industry in 2018. With the increasing need for smart, efficient office spaces, tech-savvy Gen Z stepping in the market, and blockchain technology on the verge of disrupting the industry, we are going to see some titanic shifts this year.
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