These five threats could pose some problems for the real estate industry in 2019.
It’s often said that real estate is the safest investment you can make. While this holds true a lot of the time, the real estate market is not without its risks. Aside from the historical collapses we’ve seen in years past, there are always lesser issues that pose threats to home buyers and sellers on an individual basis year after year. Knowing what’s coming and how to prepare for it is a major key in staying afloat when these threats come to sink your business. Here we’ll discuss a few of the biggest threats to the real estate industry in 2019 according to the Counselors of Real Estate (CRE).
Aside from the historical collapses we’ve seen in years past, there are always lesser issues that pose threats to home buyers and sellers on an individual basis year after year.
1. Interests rates and the economy
As interest rates continue to rise, expect to see several changes in commercial and residential real estate markets. Be on the lookout for decreased demand for commercial property and higher mortgage rates. The increase in rates is making homes less affordable and also limiting the value appreciation for commercial real estate. All in all, the harder it is to buy a home, the harder it is for real estate agents to do business. However, experts don’t expect interest rates to decline any time soon, so you may be able to convince potential clients that now is their best chance.
2. Affordability
As I mentioned before, there is a lack of affordable homes in all income brackets, excluding the most wealthy. This is being caused by low wages, rising rates, low supply, and high demand. In the most competitive housing market we’ve ever seen, the best way to bring home prices down is to build more of them. Many potential home buyers may opt for renting. But you would be smart to advise them that buying a home is the better long-term investment.
Your Guide to Buying vs. Renting
3. Immigration
Believe it or not, immigration truly has a profound effect on the housing market. When it’s restricted by law, it has a negative impact on new housing starts and home purchases. It also adds to the current shortage of skilled laborers in the United States. Many immigrants to the U.S find work in construction. And when there are fewer immigrants, the labor pool decreases, causing homes to be built at a slower pace.
4. Politics
What goes on in politics will always have a ripple effect on what goes on in real estate. Certain tax reforms and policies are aimed at balancing trade with other countries. These could have an indirect effect on domestic jobs, incomes, and properties. However, new bank policy changes regulating community banks and relaxing Dodd-Frank Act requirements could have more direct implications for real estate agents.
5. Technology
New technology has begun to take over several sectors of business, and the real estate industry’s time is coming soon. From e-commerce in the retail sector to the digital mortgage, tech is already making a splash in the real estate market. As owners and investors move to adopt these new technologies, it’s important to decide which tools are most appropriate for their business and not rush toward “technology for technology’s sake.”
What threats to real estate are you anticipating in 2019? Share them with us on social media.
FAQs
They explored several current threats posed to real estate professionals in 2016. According to Rand, the top areas of weakness for realtors are: poor consumer perception, a lack of consumer education, and squabbles over market listing data.
What do realtors see as their biggest threat? ›
They explored several current threats posed to real estate professionals in 2016. According to Rand, the top areas of weakness for realtors are: poor consumer perception, a lack of consumer education, and squabbles over market listing data.
What is the biggest threat to the real estate industry? ›
Economic uncertainty and market volatility are two of the most significant risks that real estate investors face. The current global economic climate has created an unpredictable future for people who are buying or selling homes.
What is the biggest problem for real estate agents? ›
5 of the Biggest Real Estate Challenges + How Agents Can Overcome Them
- Market Fluctuations. Nothing stays the same in real estate. ...
- Fierce Competition. ...
- Long Hours. ...
- Time Management.
1) Fear of rejection.
This is often the first thing to come to mind when realtors are asked to share their biggest fear, especially for those agents who are new to the industry. It's a scary thing to put yourself out there—to go door-knocking or cold-calling.
What is the biggest risk of real estate? ›
Real estate investing can be lucrative but it's important to understand the risks. Key risks include bad locations, negative cash flows, high vacancies, and problematic tenants.
What is the biggest challenge in the real estate industry? ›
“With interest rates rising to more than 20-year highs, it is no surprise that the biggest current concern for real estate firms is housing affordability,” says NAR Deputy Chief Economist Jessica Lautz. “This surpassed the concern of maintaining sufficient inventory, which we saw in 2021.”
Which is generally the riskiest real estate strategy? ›
Opportunistic: Opportunistic assets are the final rung at the top of the risk ladder. These deals are generally extreme turnaround situations. There are major problems to overcome, such as major vacancy, structural issues or financial distress.
What are the three most important factors in real estate? ›
Home prices and home sales (overall and in your desired market) New construction. Property inventory. Mortgage rates.
What are the dangers of being a real estate agent? ›
But performing the responsibilities of a real estate agent does involve risk, and crimes aren't uncommon. Showing a property alone, meeting new clients, and throwing open houses for dozens or even hundreds of strangers exposes you to a lot of people — not all of whom have your best interests at heart.
Poor work ethic
A common reason why new real estate agents fail is because of their work ethic. Even though the profession permits flexible hours, the working hours are long. Also, one may have to work many nights, weekends, and holidays. For those starting, there is no substitute for hard work.
Why do realtors have a bad reputation? ›
The lack of experience among some realtors contributes significantly to the negative reputation. Clients who encounter agents with limited expertise might face inadequate guidance, incorrect information, and ineffective negotiation skills. This lack of proficiency tarnishes the overall perception of the profession.
What are buzz words in real estate? ›
100 Real Estate Words That Sell
- alluring.
- architecture / architectural.
- attention-to-detail.
- beamed ceilings (wood)
- beautiful.
- brand new.
- breathtaking.
- bright.
Out of the 250 top producing agents identified in the Real Trends survey, the following percentages of agents are found in the following five states: California: 44% New York State: 24% Florida: 7%
What not to say to your real estate agent? ›
Here are the 7 most important things to not tell your realtor when selling.
- What you think your home is worth. ...
- Your need to sell quickly. ...
- Plans for upgrades before selling. ...
- Non-mandatory legal information about your property. ...
- You're okay with an inflated history of dual agency. ...
- Your lowest acceptable selling price.
Poor work ethic
A common reason why new real estate agents fail is because of their work ethic. Even though the profession permits flexible hours, the working hours are long. Also, one may have to work many nights, weekends, and holidays. For those starting, there is no substitute for hard work.
Why do REALTORS have a bad reputation? ›
The lack of experience among some realtors contributes significantly to the negative reputation. Clients who encounter agents with limited expertise might face inadequate guidance, incorrect information, and ineffective negotiation skills. This lack of proficiency tarnishes the overall perception of the profession.
What is unethical REALTOR behavior? ›
Unethical agents will often use fraudulent misrepresentation to win a listing, sell a property faster, or push for a property to sell faster. Such actions violate ethical standards and are illegal in many jurisdictions.
