The Urban Land Institute released the Emerging Trends in Real Estate report that compiles more than 800 interviews and 1,600 surveys from a wide array of real estate, economic and development professionals. Some of the top trends to look for are highlighted below.
Affordable Housing Shortage
Many markets are booming with news houses popping up all over the place but most of these homes hitting the market serve the higher end market. Developers could hit a gold mine if they figure out the perfect balance to bring affordable housing to urban markets for young adults including starter homes and affordable rental units. While margins for building higher end housing are generally better, building affordable housing, in nearly any market, is highly needed.
Generational Transitions
Gen Z will be graduating into the housing market starting this year. They will be joining it much like millennials are; loaded with debt and preferring urban living. While Gen Z is looking to enter the market, Baby Boomers will slowly be exiting. Many will continue to look to downsize by selling off their larger homes. Their exiting is slowed due to loan burdens and a lack of financial planning, much like millennials entrance into the housing market was stalled due to the same reasons.
Tax Reform
With the unpredictable Trump administration charging ahead with tax reform some things to expect are proposals to double the standard deduction on personal income, changes to investment amortization and the disappearance of the 1031 tax-free exchange program and low-income housing tax credits (LIHTCs) which would add disruptions and numerous potential ripple effects. While all these topics have been discussed they still have a while before they will be implemented into law.
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