The countdown to 2020 is officially on! That means one thing: planning season. We’re taking a look back at some interesting patterns from 2019 and discussing our top picks for real estate trends to look out for next year.
1. Generational Shifts: “Silver Tsunami” + Welcome Gen Z
As millions of aging Americans enter their 60s and 70s, there is potential for a variety of impacts on the housing market in the coming years. Senior housing demands often mean downsizing and cost-saving… so the market could see higher demand for smaller, more affordable inventory. Because inventory of these smaller one-level homes are limited across the board in the US, competition could increase.
We recommend doing some research on the age demographics of your city. If you live in a popular retirement city (like Florida or Arizona), it’s even more important to be aware of this influx of retirees and what that means for real estate.
Americans Age 70+
Also riding the winds of change are the newest homebuyers to enter the market — Generation Z. According to a TransUnion report, the number of Gen Z shoppers (born between 1995 – 2015) who took out a mortgage more than doubled in one year. YoY growth was +112% in comparison to +12% growth from millennials.
Gen Z Mortgage Lending +112% YoY
So the musings of new, younger homebuyers is not something to overlook! It’s important to consider what the profile of a Gen Z homebuyer looks like. Similar to millennials, they are riddled with student debt. That means smaller spaces and affordability are key. In combination with the millennial market and the silver tsunami, it’s easy to see why experts are predicting more of a demand for small, affordable inventory that is both senior and starter home-friendly.
2. Upcoming Recession: Facts & Fears
Experts predict that a recession will hit the US economy around 2020-2021. However, this time around, the housing market is not the cause, and there’s a good chance that it won’t be hit as hard as other sectors in the economy.
Because of some positive signs such as a low unemployment rate, stricter Fed lending policy, and steady/increased housing prices, many experts believe that real estate is actually moving towards a more balanced market. The most optimistic predictions lean towards a smooth descent into a balanced market, rather than a crash. Or a deflation of a bubble, and not a full-on burst.
So this is good news! However, it’s important to be cautiously optimistic (and always prepared.) Recession fears, whether they’re warranted or not, could lead to seller hesitation. Seller hesitation could exacerbate an already low-inventory market, with first-time buyers wanting to snap up good deals, but sellers wanting to wait until prices rise.
Snapshot: 3 Economic Trends
Slow growth in home price Interest rates are rising Demand is rising, while supply continues to shrink
3. The Top Housing Markets in 2020
Urban Land Institute released their top 10 markets for 2020. There are no major “shockers” on the list, however, some smaller cities made the top 10-20, including Charleston, South Carolina and Indianapolis. The top cities are all experiencing population booms as well as an influx of tech-driven companies.
Top 10 Housing Markets for 2020
- 1. Austin, Texas
- 2. Raleigh/Durham, North Carolina
- 3. Nashville, Tennesse
- 4. Charlotte, North Carolina
- 5. Boston
- 6. Dallas/Fort Worth
- 7. Orlando, Florida
- 8. Atlanta
- 9. Los Angeles
- 10. Seattle
4. Suburbs Have a Comeback Moment
Census data is showing that the “back to the city” trend of the early 2010s is shifting. City population growth has declined while suburban growth has increased. The move towards suburbia could be caused in part by the tapering of the Great Recession, allowing mobility (particularly for millennials) and the ability to purchase homes.
Because millennials are now having children, the rise of suburbia makes sense. They want the stability and affordability of what the suburbs offer, however, they still want some of the city-like amenities they’ve grown accustomed to. And so, the term “Hipsturbia” was born. Essentially, it means “cool” suburban communities that are more walkable, accessible, and fun. We’re seeing the trend grow in smaller communities outside of New York City and in suburbs of Los Angeles and San Francisco.
5. The Rise of the iBuyer
The iBuyer conversation is not dying down. In fact, it’s exploding on the cusp of 2020 with Zillow announcing its plans to expand its iBuyer Program in 6 New Markets, and Offerpad raising enough capital to double their cities served in 2019 and again in 2020.
It’s the #1 trend in real estate that you can’t afford to ignore.
More than likely, you’re familiar with what an iBuyer is, but let’s recap just in case. It’s essentially an “instant” buyer, allowing homeowners to get an instant offer on their home from an iBuyer. It’s fast (you get a check in a couple of days), and the main difference is that you’re selling your home to a company. The appeal to homebuyers is speed, convenience, and alleviating the “limbo” concerns of selling before buying (and vice versa).
So far, we know that most markets with iBuyer activity are in a median price range of $200,000 to $300,000. This seems to be the sweet spot for iBuyer demand. However, the influence is expanding, faster than many predicted. So we’ll have to stay tuned and keep an eye on how these companies perform in different, more expensive markets.
Here are the cities where major iBuyers are currently operating [ATTOM Data Solutions Report]
Arizona: Phoenix, Tucson California: Sacramento, Riverside, Los Angeles Colorado: Denver Florida: Tampa, Orlando, Jacksonville Georgia: Atlanta Nevada: Las Vegas North Carolina: Charlotte, Raleigh-Durham Oregon: Portland Minnesota: Minneapolis-St. Paul Tennessee: Nashville Texas: Austin, Dallas-Fort Worth, Houston, San Antonio
Arizona: Phoenix, Tucson California: Los Angeles Florida: Orlando, Tampa Georgia: Atlanta Nevada: Las Vegas North Carolina: Charlotte, Raleigh Texas: Austin, Dallas-Fort Worth, Houston, San Antonio Utah: Salt Lake City
Zillow Instant Offers
Arizona: Phoenix California: Riverside Colorado: Denver Georgia: Atlanta Nevada: Las Vegas North Carolina: Charlotte, Raleigh Texas: Dallas-Fort Worth, Houston
California: San Diego, Los Angeles, Inland Empire Colorado: Denver Texas: Dallas-Fort Worth
So, what does this mean for agents? You need to start thinking about your answer to this consumer demand (because clearly there is one). The debate is on in the real estate community with many arguing that you “get on board or get left behind” and building their own iBuyer programs. Keller Williams has jumped on the iBuyer train, launching Keller Offers in the summer of 2019.
Whether you go the way of adoption or resistance, there is one thing that everyone must do for their consumers: educate. More and more, home shoppers are going to hear about the instant offer possibility. So, being transparent about their options from the very beginning and helping them make the best choice for them is essential for being a successful agent.
6. Technology Gives the Edge
If the last trend about iBuyers tells us anything, competition is fierce. Based on our experience working with real estate top producers for 11+ years, we know that technology is critical for building an evergreen/lasting business. Building a tech stack that supports and empowers your business will give you the competitive edge you need.
Snapshot: 3 Technology/Proptech Trends to Watch
Big Data: Are companies getting more predictive with consumer trends? Is it possible to forecast when a prospect might be selling or buying? Blockchain: Cryptocurrency and a digital, public ledger that could lower middleman expenses Virtual & Augmented Reality: Viewing a property in 3D from the comfort of your living room? It’s not impossible anymore.
For the day-to-day, it’s critical to invest in the right technology. That means finding tools that integrate with one another, deliver ROI, and allow you to focus your energy on more dollar-productive activities.
What do we mean by that? Consider this, would you rather spend your time manually sending listings to new leads OR have a system that automates personalized eAlerts and nurture campaigns? Would you rather spend your time responding to and qualifying a new lead that registered on your site OR work with a company that handles lead qualification for you and focus on scheduling a showing for your hottest lead?
BoomTown recently announced a new solution, Success Assurance, which empowers agents even further. Success Assurance offers the perfect mix of tools and services to handle lead generation, lead qualification, and lead management, serving transaction-ready prospects to agents.
Combines BoomTown’s CRM technology with RealContact’s texting capabilities and a new calling service Acts as an extension of a real estate team, with an ISA-like concierge responding to new leads 24/7, within 90 seconds Enables agents to work with transaction-ready leads Leads are engaged and nurtured for up to one year from registration Clients can customize scripts, monitor conversations and jump in at any time