Although real estate is seen as one of the most stable and profitable markets in the U.S., it is not immune to major cyclical changes. This has been especially true during the pandemic, which dramatically affected inventory and property prices across the country. However, the market may be shifting soon, and it’s important to keep an eye out for upcoming trends.
To unpack these shifting market forces, 15 members of Forbes Biz Council shared their insights on the future of real estate and what trends they believe will impact the market in the coming years. Here are their predictions and how their fellow industry professionals can start preparing now.
Forbes Biz Council members share their predictions for market trends in 2022.
Photos courtesy of the individual members.
1. Trading Shares
Trading shares of individual real estate assets is about to go mainstream. We currently are in the E*Trade phase of investing in commercial real estate. In the next year, we will transition to the Robinhood phase as real estate investing becomes more accessible. FinTech solutions are emerging that lower every barrier to entry for people to invest in the places we live, work and play. – Calvin Cooper, Rhove
2. Increasing Complexity Of Local Zoning And Permitting
The complexity of the local zoning and permitting process (i.e., municipalities and townships) will become increasingly more valuable to understand. Planning and zoning offices have a major influence in master planning that governs where real estate can be developed, how it can be entitled and for which intended uses or purposes. Engage directly with local planning departments! – Bryan McLaren, Zoned Properties, Inc.
3. Natural Disasters
Natural disasters will change the desirability and pricing of real estate. For example, the California wildfires have resulted in home fire insurance rates skyrocketing near forests that have flammable trees such as the eucalyptus tree. In the meantime, I expect the increasingly dire hurricanes and storms in Texas, Florida and Louisiana to hurt neighborhoods that tend to be consistently impacted by them – Deniz Kahramaner, Altasa
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4. Secondary Market Revitalization
With population growth shifting to secondary markets and beyond, these communities often need a revitalization of their commercial districts, older neighborhoods need to be redeveloped as well as new assets to support demand. Well-positioned investors and developers can act upon these opportunities. – Anne Keshen, RMT Capital Management
5. More Smart Homes
We are going to see more adoption of smart home technology and self-showings, and we will continue to see more investors embrace 3D virtual tours. I think 3D is just scratching the surface in the single-family rental industry, and in five years, every property will have a 3D tour that will be used for both operations and marketing purposes. – Kori Covrigaru, PlanOmatic
6. Third-Party Owner Representatives
The heated real estate market has led to difficulty in finding qualified professionals to service project needs. As a trend, developers are turning to professional third-party owner representatives to assist, as local experts are the best resources for executing construction and real estate projects through their extensive network and ability to provide bandwidth and scalability to developers. – Adam Mopsick, Amicon
7. Mixed-Use Zoning
Mixed-use zoning will become the biggest trend and asset class. Adaptive reuse of assets from hotels becoming housing, offices becoming mixed-use, parking becoming self-storage and last-mile distribution centers and retail transforming into experiential live/work environments. The repositioning and repurposing of existing assets will be tremendous value add investments and projects for years to come. – Jacob Bates, JLL Flex
8. More Property Tech Innovations
Property tech will transform the industry such that various processes will utilize digital services. It will create efficiencies to allow professionals to focus solely on the interpersonal aspect of the business. At the end of the day, it is a relationship business and while technology will advance to ease transactions, it can never take away personal connections. Focus on those quality connections. – Pam Scamardo, TPK Properties LLC
9. Virtual Tours Focused On Visuals
Per the National Association of Realtors’ recent survey, millennials made up 38% of U.S. homebuyers in 2020. Most of these buyers toured properties they selected online, and nine out of 10 credited photos as the determining factor. For your listings, invest in high-quality photography, virtual tours and short films of the neighborhood to provide buyers with a true sense of where they will be living. – Tara Hotchkis, Compass
10. A Boom In Auction Sites
Auction sites will boom as investors and homebuyers vie over limited inventory. We’ll see online sites rise as a way for buyers and investors to discover and research properties more easily. For investors looking at the burgeoning single-family residential market, online auctions allow them to bid remotely, reduce travel costs and expand options with virtual access to properties nationwide. – Miriam Moore, ServiceLink
11. ‘Trade-Ups’ For First-Time Buyers
As first-time purchasers have hit the market en masse, higher-priced single-family real estate has lagged assets with lower prices. These first-time purchasers are now realizing they’d like a bit more space or features and will be looking to trade up in the next few years. – Robert Jafek, Boomerang Capital Partners
12. Digital Currency For Real Estate Transactions
Bitcoin is probably the next “big thing” in real estate at every level. Tenants wanting to pay rent in digital currency, sellers looking to cash out with digital currency and buyers wanting to use it for purchases are all coming to the real estate industry. Find people who understand the nexus of real estate and digital currency and learn before you’re faced with a digital currency transaction – Sherman Ragland, Tradewinds International Holdings, LTD
13. Cash-Only Deals
Investment companies are increasingly approaching sellers with attractive cash-only deals. Over the coming years, this will result in a massive loss of transactions for agents. If you can’t beat them, join them. Ask yourself how you can partner with these companies—for example, by serving as a seller’s agent when these properties go back on the market. Or just get into the investment business. – Kevin Markarian, Marker Real Estate
14. Higher Customer Service Expectations
As residents and tenants expect the same strong customer experience they get from delivery apps and other online platforms from the places they work and live, operators that deliver on those expectations will be set apart. Multifamily and commercial real estate is increasingly becoming a customer-centric business and technology like tenant experience platforms increasingly will become the norm. – Benjamin Pleat, Cobu
15. A Cooling Residential Real Estate Market
The residential real estate market will continue to cool off over the next three years, so don’t count on selling quite as easily as it has been in the hot market the last few years. The Fed will be forced to raise rates as inflation continues to go up, which will make housing more unaffordable. So bottom line, conserve cash and be prepared for the market slowdown. – Nick Ron, House Buyers of America