Five Ways the Real Estate Industry is Changing and What You Need to Know
Summer is just around the corner and change is in the air. Whether it’s a change in the weather or a change in careers, Americans are in the mood for change. For many, this season of change means finding a way to reinvent themselves and change careers.
For many people, an attractive option is a career in real estate, which offers the ability to be your own boss and set your own hours. In keeping with the theme of change, the real estate industry is no exception from change. Below are 5 ways the real estate industry is changing and what you need to know in order to change along with it.
1. Mobile Internet Allows Buyers to Search and Compare Prices on Their Own Time
With the rise of mobile technology, nearly everyone has a smartphone and/or tablet at their disposal. It’s nothing new to say consumers are turning to their smartphones to keep up with their favorite sports teams and celebrity gossip, but what realtors need to be aware of is how useful mobile can be for searching for a new home – especially in a hot market. Home buyers are using their phones to check home prices and comparing them to market values on sites such as Zillow or Redfin.
“It has become clear that consumers are using mobile devices and tablets to search properties and get real estate information,” said Kathy Connelly of Prudential Georgia Realty in a 2012 interview with Mobility Magazine.
As a result, real estate agents find themselves with clients who are more knowledgeable about markets and will need to try a different sales or buying strategy in order to get them into the home of their dreams.
2. Generational Shifts in Buyers
Millennials, people born between 1980 and the 2000s, have entered the workforce and have strong buying power. Jonathan Smoke, an economist for Realtor.com, reports that the millennial generation is becoming ready to become first time homebuyers as they grow and establish themselves professionally.
“Millennials emerged as a dominant force in 2015, representing almost 2 million sales, which is more than one-third of the total. This pattern will continue in 2016 as their large numbers combined with improving personal financial conditions will enable enough buyers between ages 25 and 34 to move the market—again,” said Smoke.
Other populations that are projected to affect the real estate industry are baby boomers. As baby boomers continue to retire, many are moving because they’re looking for fun locations or to move into smaller homes that are easier to maintain.
3. Un-Affordable Rents Will Become Higher Than Housing Prices
As rents begin to rise in popular markets, like Portland, Ore., many people are looking to become homeowners in hopes that their mortgage will be lower than rent.
“More than 85% of U.S. markets have rents that exceed 30% of the income of renting households,” explains Smoke. Smoke goes on to discuss that as a result, rents are growing to the point where they’ve surpassed the cost of a mortgage. As a result, many renters are exploring their options when it comes to getting a bank loan to buy their first home.
4. New Mortgage Products Will be Needed
People entering the real estate industry need to be aware that traditional mortgage products will need to evolve over time. As wages continue to stagnate and the cost of living rises, many younger buyers are finding it harder and harder to save for the traditional 10 to 20 percent down payment.
“From my observation, the biggest reason people are putting off home ownership is cost. Older millennials are finding it hard to service student debt and save for a down payment on a home all while paying for their other living expenses,” said Kelsey Robison a former client services coordinator at Southern California real estate agency.
The ability to counsel clients in saving money and give advice on financing options is a skill more and more real estate agents are needing Robison goes on to explain.
5. Inventory Becoming Smaller and Smaller, Especially Since 2008
Furthermore, as the economy recovers and people look to buy homes or property, this will lead to a rise in demand. As demand increases, the supply of real estate will decrease, especially when compared to the economic recession of 2008 when there were more homes compared to buyers. As a result, realtors will need to be fiercely competitive in marketing their skills and finding listings.
Many people considering entering the real estate industry may find that returning to school and taking business and real estate classes a good starting point to figuring out how they can build their real estate career. Marylhurst University in Portland, Ore. offers an MBA in Real Estate online designed specifically for working professionals and people looking to advance in the real estate industry. The program provides the depth of knowledge to stay ahead of the real estate trends and serve the growing millennial population.