Real Estate Investment Forecast for 2019: Will the Trends and Prices Change?

If one of your new year resolutions is to finally own a house or invest in real estate, then you need to keep a keen eye on current real estate trends and conditions.

It took a number of years for the real estate market to recover from the shock of 2008 global meltdown, but due to its long-term resilience, there has been an increase in the total value of real estate investments in the last 10 years. The following trends can be considered as useful pointers to help suggest where the real estate performance indexes such as prices, will go this year;

Mortgage Rates Will Rise

According to reports published by professionals in Real Estate, mortgage rates for buying available homes for sale are expected to rise in 2019.

The trend is such that mortgage rates have been rising faster than a number of economists predicted, in recent years. The effect of this could be that there may be fewer potential home buyers if people hold back due to affordability. It is expected that the average 30-year fixed interest rate mortgage will rise to 5.8% this year which will be the highest since 2011.

Another potential effect of rising mortgage rates is that most homeowners contemplating of moving out and selling their homes may have to stay where they are for longer if potential homebuyers decide to wait until more favorable rates are available before buying.

Real Estate agencies often know the ins and out of all neighborhoods and they can often pinpoint whether a property is a fair price in current market conditions.

Home-buying in Suburbs Will Increase

With home prices rising in major cities, experts believe the prices of homes in the suburbs will increase, as more people migrate into these areas.

This does not necessarily mean they have to commute to work for longer times. Tech companies and startups are beginning to move to secondary markets where millennials are able to afford to live.

This increase in the population in the suburbs could eventually increase home prices in response to supply and demand pressures.

Office Rentals May Slow Down in 2019

One sector of the real estate market that is expected to demonstrate slower growth is the office space rental sector. Due to sluggish employment generation, the demand for office space has been weak in the last 10 years. Since 2012, the total leased office space has only risen by about 1%, though sectors such as Finance, business service, and information services have rented more office spaces than other sectors, there has been a rise in shared workspaces such as cubicles instead of individual workspaces over the years.

Office sharing arrangements are expected to grow by about 65% in 2019 as businesses decide to cut costs of operations. Though, as more startups prefer to share office spaces in forms of cubicles, property owners may decide to increase rents in order to augment the costs of running properties, in terms of utilities.

Retail Property Markets May Slow Down in 2019

In 2018, many owners of retail properties were busy negotiating new or revised leasing terms with their tenants following a string of bankruptcies filed by retail companies in 2017.

The store foreclosures in large malls have slowed down from 3.3% growth in the first quarter of 2016 to 1.1% in the last quarter of 2017. Though it picked up slightly at 2.1% in the third quarter of 2018 current trends have shown that rising costs of renting retail properties are still heading upward but profit margin of store owners have remained fairly stagnant.

Retail property markets are predicted to continue to face challenging conditions ahead.

Rents Will Increase on Industrial Properties

The Industrial property market has shown the strongest growth in the Real Estate Sector with an average growth of more than 6% every year, in the last 5 years. Although demand for industrial properties has slowed a little, construction of new ones seems to have taken up the slack to a certain extent.

Despite slow demand being the current trend financial and real estate experts believe that new construction activity in industrial real estate is still predicted to grow at rates not lower than 5%.

The need to share office spaces may also cause an increase in the prices of renting or purchasing industrial properties.

Smart Properties on the Rise

Gone are the days when basic amenities such as water, and gas are the norm, as these days, property owners are luring new tenants to rent their properties by including smart technologies.

Millennials for instance, now choose properties that have smart home technologies such as smart security devices, smart home entertainment systems, and smart lighting systems.

However, the inclusion of smart devices in properties has also increased the costs of renting or buying such properties.

In addition to the keyless locks, smart thermostats, and smart doorbell cameras, consumers are also looking for properties with an open plan layout that can give them the flexibility they want.

Green Homes and Commercial Properties Will Increase

Green homes are homes that are designed to be conservative in their nature and performance. They are driven by the urgent need to preserve the environment.

In 2019, it is expected that Green Homes will increase in number with the installation of environmental-friendly structures that will rely on solar, wind and water for its energy supply instead of the regular public power system. Secondly, the government is rewarding Green Homeowners with several tax benefits which may further fuel the growth of such properties in the year.

In conclusion, the real estate sector can sometimes be unpredictable, as trends can often fluctuate, making it quite confusing to potential investors. It is prudent to seek the help of Real Estate Agencies that will help you find your ideal home or premises.

These real estate agencies normally have a number of listings on their websites which gives them a good handle on current values and emerging trends.

A good Real Estate Agent can also help you in estimating costs of renovation in a potential new home, provide general guidance on tax-related issues and assist with reviewing property documentation.

Will you follow the trends when making a property investment in the near future?


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