2019 is right around the corner. Are you ready for what the future holds in the real estate industry? The predictions may surprise you.The economy is viewed as strong, almost overheated, with interest rates rising substantially for the first time since the recession. But is the economy really that strong? Unemployment is low, but wages aren't keeping up with the rising prices of household necessities. The stock market is in a deep dive—or was that last week— and now it's heading for new highs. And how does that impact the housing market? Whether in the Maryland real estate market, or California, change is coming.
2019 Trends in The Housing Market
Economists and tea leaf readers alike agree that the housing market is due for a slowdown in 2019. The prediction that 2018 would be a better year than 2107 was accurate until the summer, when buyers and interest rate hikes put the brakes on booming sales. You're an industry pro and don't need to be told that tight inventory is still creating price creep while rising interest rates are dampening enthusiasm. However, it does bear repeating in the context of the broader economy. The tariff and impending trade wars with the EU and China are not easy to "win.” Higher tariffs are, in fact, higher taxes on goods manufactured in the US and sold abroad, and on goods brought into the country for sale. When things get more expensive, homebuyers get skittish about buying houses. On the export side, job uncertainty contributes to an understandable reluctance to buy. This is most prominent in the Midwest right now, but it will trickle across the country as higher tariffs slow growth across economic sectors.
Realtor Magazine has an article that breaks down in detail, in the short and long term, the major threats to the real estate market in 2019, but here are the highlights.
1. Political Uncertainty
Economic issues are addressed above, but Congress' promises to ease Consumer Financial Protection Bureau (CFPB) regulations for banks regarding asset management regulations have not come to fruition. That's causing lenders to keep a tight rein on lending policies.
New construction starts are down, and it's a seller's market for the near term.
Three main influencers in residential real estate are housing for students and seniors, amenities, and location.
A decaying infrastructure is having a negative impact on real estate. Across the US, roads, bridges, airports, the electrical grid, and water and sewer lines are all in need of repairs—to the tune of $4.5 billion. Hard as it is to believe, most third world countries have a more modern and functional infrastructure than we do.
2. Natural Disasters
Put climate change in this category, too. The recent destruction of so much of the Southeastern coast and the Gulf of Mexico is costing billions to repair. Add to that wildfires in California, earthquakes, volcano eruptions, flooding, and rising sea levels—the expense of rebuilding is prohibitive and insurance companies are tightening coverage limits in some areas.
Immigrants buy houses—it's one of the first things they do. Proposed caps on legal immigration is predicted to have a negative impact on the skilled labor pool (the H1 Visa workers), housing starts, and home purchases.
Changes in the Market: Watch for Bubbles
This is a big country, and your area may not have been a part of the blistering markets in some major cities. Going forward, this could be a blessing in disguise—if prices didn't skyrocket, there's no bubble to burst. Indicators this time around are not based on the fragility of the subprime mortgage bubble. Other factors, such as another global recession, will stop the market cold. China and Canada are both in the midst of a housing downturn, so it could happen here.
Millennials and Empty-Nesters Rule
The two demographic sectors most likely to buy houses in the coming months are at either end of the home-buying cycle. Millennials, who aren't exactly teenyboppers anymore (the average age is 28) are coming into the market in droves. Interestingly, they're more inclined to purchase single family homes more than townhomes and condos—and are able to spend more on that first home. These are the buyers who are completely immersed in technology and shop for a house the way they do for everything else—online.
Empty-nesters are looking to downsize (now that the millennial kids are out of the basement), but not necessarily give up amenities. These almost-retired buyers want luxury and convenience, and are able to pay for it. They, too, are tech savvy and conduct a fair amount of business online.
Capturing the Buyer with Technology
Real estate professionals who have gone paperless are already ahead of the game, but just because you've gotten the hang of Docusign or Qualia, which is what Velocity Title uses, doesn't mean you're keeping up with the latest tech tools. There are apps that range from Artificial Intelligence (AI) chatbots to IOT (Internet of Things) devices to unified communications. Some of the cutting-edge tech for next year will sharpen and shorten your sales cycle, and manage your database so you can focus on your serious prospects. These production-boosting technologies are in the market now.
These "live chats" answer a call or text anytime, and lead the prospect through qualifying in a seamless process to ultimately setting the appointment when the lead is super-hot. The profile data then streams into your CRM database.
Internet of Things
IOT is the next big thing in tech, and can qualify leads you didn't even know you had. An example would be a small Bluetooth beacon in an Open House property that would alert any cell phone in the area to the Open House and the details—that's the ultimate in a smart house.
Keeping everybody in the contract-to-close loop is a challenge, even when you're paperless. Software that lets all parties log in and respond to requests or edit documents in real time keeps the "paperwork" process flowing more smoothly—particularly when buyers are accustomed to using their mobile devices to transact business.
Managing your technologies in the always-evolving real estate industry is the key to a successful 2019, and riding out any downturns in the market. Velocity Title can show you the best software and apps for the entire lifecycle of your business. Our new Velo-Connect Platfrom is streamlining the way you and your clients experience closings. Access everything from your mobile device, in real time. To learn more, click here.