The last five to ten years have seen more significant fluctuations in the real estate market than in many previous decades. COVID-19 shutdowns, supply and demand shifts, economic factors, and the arrival of Gen Z buyers have all brought drastic changes. These shifts have left many real estate investors questioning the future. If you’re thinking about investing your money in real estate, it’s crucial to understand the projected trends shaping the industry’s future. At Cornerstone Commercial Investments, we stay vigilant, tracking the real estate investment landscape and its evolving directions.
Trends Shaping the Industry
House Hunting Goes Digital-First
The digital revolution has reached real estate. With more adults working from home and leveraging technology, the preference for remote transactions is growing. Here’s how:
- Search for Properties Online: Potential buyers can use digital platforms to find properties that meet their criteria without leaving their homes.
- Attend Virtual Tours: Virtual reality (VR) and 3D tours allow buyers to explore properties remotely, making the process more convenient.
- Complete Transactions Digitally: From signing documents to finalizing deals, digital tools streamline the entire buying process.
Remote Work’s Impact on Residential and Commercial Real Estate
Remote work is not just a temporary trend; it’s here to stay. The COVID-19 pandemic fundamentally altered work habits, with nearly a third of employees working from home part-time or full-time as of August 2022. This shift has significantly boosted housing demand, contributing to a 24% rise in U.S. house prices between November 2019 and November 2021. A significant 64% of adults prefer jobs that allow them to work remotely. This shift has several implications:
- Residential Real Estate: Increased demand for homes with dedicated office spaces.
- Commercial Real Estate: Companies might downsize office spaces or seek flexible leasing options, impacting commercial property values.
Data-Driven Decision Making
Access to data is transforming how buyers and investors make decisions. Comprehensive databases offer information on the following:
- Properties and Neighborhoods
- Market Trends
- Community Resources
This data helps buyers compare options, evaluate potential investments, and navigate online listings more confidently.
Single-Family Housing Demand Creates Shortages
The demand for single-family homes is outstripping supply, leading to significant shortages. This trend impacts:
- Housing Prices: Increased demand drives prices up.
- Rental Market: Higher purchase prices affect rental costs and availability.
Rising Mortgage Rates and Interest Rate Fluctuations
Mortgage rates are a critical factor in housing affordability.
- High Rates: Could deter potential buyers thus increasing the demand for rental housing.
- Lower Rates: May stimulate market activity.
Rising Home Prices
As we step into 2024, home prices are expected to rise by up to 2.6%, according to NAR. This will lead to:
- Increased Competition: Buyers will face more competition, often resulting in multiple property offers.
- Impact on Rental and Retail Markets: Rising home prices also influence rental costs and the occupancy of retail spaces.
Tight Housing Inventory
One of the most significant challenges in 2024 is the limited housing inventory. Current data shows a historical low, down by 13.6% compared to the previous year. This shortage exacerbates competition and pushes prices higher.
At Cornerstone Commercial Investments, we stay ahead of these trends to provide our clients with the best investment opportunities. Whether you’re a seasoned investor or new to the market, understanding these trends will help you make informed decisions. For more information or to discuss our portfolio and available options, contact us today or visit our website.