United States real estate is a huge and dynamic market, meaning that it seldom moves quickly. Therefore, it is unsurprising that the annual Emerging Trends report, created by Urban Land Institute and PricewaterhouseCoopers researchers by interviewing 750 industry members and surveying 1,450 more, conveys a sense static and stasis.
Things may feel unstable with the recent economic and political uncertainty but the report suggests that we can expect a soft landing, not a sharp crash. There may be fewer sudden moves this year but some of this year’s emerging trends may still have the potential to become breakout investments.
Hipsturbia
Recently, increasing numbers of millennial parents with school-going children are moving from urban areas to live in the suburbs. Although they moved away from the city, this generation does not want to give up what city life has to offer. They still want affordable dining, shopping and entertainment options within walking distance from their homes. This has led to the rise of Hipsturbia, which describes the evolution of many suburban areas. These locations are experiencing developments in retail, recreation and transit access with all of them between walking distance of each other.
This phenomenon can be seen in places like Maplewood, Hoboken and Summit in New Jersey, Evanston in Illinois, Santa Clara in California and Yonkers and New Rochelle in New York.
The Rise in Demand for Senior Housing
Due to our population’s high life expectancy, the baby boomer generation is approaching their prime retirement years. According to Harvard’s Joint Center for Housing Studies, the number of Americans over age 80 will double from 6 million to 12 million in the next 20 years. By 2035, a third of US households will be owned by somebody over age 65. With the last boomers turning 80 only in 2044, there is expected to be a huge flood of seniors searching for housing options in the years to come. They will be looking for upscale urban apartments and places encouraging an active lifestyle. Many of them will also be renovating or downsizing their current homes to prepare for their retirement.
The Popularity of Principled Investment
Many of the younger generations, like the millennials, are starting to invest in things that promote some sort of social good. The report calls it ESG which stands for environmental, social and governance.
This means that real estate projects that are more community-oriented and not just for profit are more likely to become popular investments vehicles in the long term. For example, projects related to more sustainable multifamily construction, sustainable water management, clean transportation, energy efficiency and the development of environmentally friendly technologies are expected to attract more of this new community-focused capital in the future.
A survey done by on Wall Street firm has even shown that this kind of investment comes with a performance premium of 10 to 40 percent.
The Advance of Technology
Technology in the real estate sector such as property technology and smart home devices for residential settings have long been bringing new ideas to the larger real estate business and have been due for a breakout for years. Although real estate is slow to adopt such technology, its impact is starting to show.
New tools to digitize the home selling process, new ways to analyze and work with property data and iBuyers are becoming increasingly popular. However, most of the attention is on the multifamily sector where companies are coming up with new products to simplify operations and new amenity-laden services for residents.
Smart home adoption, specifically security cameras and digital assistants, is also becoming more widespread and it is expected to become even more so with the advent of 5G.
