It is overwhelming how quickly things change and how fast time flies by! The last couple of years brought many changes in the U.S economy, technology, and real estate investing industry. During these years, people dramatically changed the way they handled their finances, affecting the market in many ways. From new online platforms and technology devices to more sophisticated transactions and securities, innovation in every area fundamentally changed the way real estate investment functions. Why does real estate investing change from one year to another? What are the key factors that affect these changes? And are these changes always for the better? Let us begin by briefly discussing how real estate investment trends changed over the years.
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1. Change in the market
We all know that after the housing boom of 2003-2005, home prices increased dramatically. This caused the rise and fall of the real estate market. Housing prices started to decline and reached its largest price drop. Rates of foreclosure increased among homeowners. This change in the market had a direct impact not only on home valuations, but mortgage markets, home builders and real estate investments. Now when we look back at all the changes real estate went through, we notice what a huge improvement it underwent from past years to now.
2. Technology’s effect
One great real estate investment trend that tends to develop every year is the effect of technology. As technological devices developed quickly and became present in the home and office, consumer behavior evolved dramatically. Information technology changed the way real estate information was shared. With many online sites now available that provide real estate information to the public, this trend continues to be the most useful. Many real estate investors used to suffer from not having easy access to information, but this technological change effected real estate investment positively.
3. Crowdfunding
This real estate trend definitely changed from past years. When you look back at real estate investment ten years ago, you notice that the majority of the people perceived real estate investing as the domain of the hyper-wealthy. This is due to the investments often requiring a large amount of starting capital. However, throughout the years this perception changed for many when crowdfunding was introduced. The proliferation of crowdfunding platforms is perhaps the most important new development in real estate investment. It allowed investors to place their funds in a variety of properties, so crowdfunding platforms made real estate investing simple for ordinary people. Before, real estate required thousands of dollars and all that money went into the same investment. Now real estate crowdfunding platforms require so much less of an initial investment.
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4. JOBS Act
The paradox of crowdfunding has been increased by the passing of the 2012 JOBS Act. The JOBS Act made the general application of equity and debt securities legal. This opened up the real estate investment space to new participants. The JOBS Act of 2012 allows for general application of real estate projects to a much broader range of investors. This real estate trend really benefited real estate investing throughout the years. Because of the JOBS act, the growth of online investing in real estate has been dramatic. The predictions are for this trend to continue over the next decade.
It is obviously clear that real estate trends change from one year to another. Whether it’s for the better or for the worse this evolutionary change is endless. So what are the factors that drive real estate investment trends to change?
- Demographics
Also known as the study of the population, demographics can definitely affect real estate investing trends. Factors such as age, gender, income, and population growth help a lot of investors when it comes to making any real estate decision. Demographic statistics help in determining what type of property is in demand and the price of real estate. Is the population composed more of millennials or of seniors? Is the majority of the population employed with stable incomes or new graduates that are unemployed? Is the population growth in a certain area gradually increasing suggesting a demand in real estate property? Questions like these are continually being raised every year determining any change that may occur in real estate trends.
- The economy
Of course the economy is a key factor of any change in real estate trends. The U.S economy plays an essential role in real estate investments. Take for example the economic uncertainties around the country. Stock markets have been highly volatile and international currencies are always in constant trouble which in turn affects real estate. The economic downturn has led to greater demand for rental properties since owning a property is not affordable for everyone. Any change in economy, good or bad, will led to a change in real estate investment trends for the future.
- Government policies
Government policies are another key factor that can have an impact on real estate investment trends. Governmental forces on real estate values can be significant. For example, taxes. Higher city and state income taxes result in less disposable income for real estate purchases. Another governmental force that can affect real estate investing is labor issues. Labor issues can have a major influence on a business’s choice when building or relocating a facility. A company may decide for a certain location because of certain labor laws and regulations, including whether or not labor unions are prevalent. So in the end any governmental policy can drastically change real estate investment trends for the future.
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We can go on and on about factors that affect real estate investments and how real estate developed a variety of different trends throughout the years. Yet what’s more important than the past is the future; and we cannot end this discussion without simply mentioning what’s expected for the future in terms of real estate investment.
Real estate trends for the future
Obviously many investors strife for better opportunities in real estate and one way to open up these opportunities is by first building the future. It is predicted that global megatrends will change the real estate landscape. The changing landscape will have major implications for real estate investments and development. Of course with Donald Trump as the new president, it is likely to presage some dramatic changes for the housing industry, seeing how the values went up so high. Also another trend that is likely to occur in the upcoming years is millennials and their continued role in real estate. More millennials are expected to buy more houses. You never know what the future holds or what it might bring. As for real estate investment trends, it is like a roller coaster ride with many ups and downs.
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