What Will 2018 Look Like for Real Estate Investors?
As 2017 winds down, many of us will be reflecting on the year and all it brought. While reflection is always a good thing – it’s how we learn and grow and become better investors – we can’t dwell too much on the past when 2018 is bearing down on us so quickly. Instead, we must look to the future and begin our plans for the new year.
So the question is, what will 2018 bring?
Right now, analysts are saying that we’ll continue to see a strong real estate market overall, as well as continued economic growth. Here are some of the predictions for 2018 from Forbes, Zillow, and the National Association of Realtors:
- Increasing short-term rentals. Experts predict more and more people will be looking for short-term rentals in 2018. This refers to rental terms of anywhere from one week to a few months. Often, this comes in the form of vacation rentals, like what you see with Airbnb and similar sites, but it can also be for people who are relocating temporarily for a job and need short-term housing, or even college students.
- Fractional investing. There will also be an increase in fractional investing, where people team up with others to buy property – often getting creative in their methods by using crowdfunding and peer-to-peer lending. As more people decide to get in on passive real estate investing, sole ownership properties will begin to trend more toward fractional ownership.
- Smaller living. McMansions are so early-2000s. The trend now is for much smaller spaces that are easier to maintain but don’t lack in quality. This is especially true for urban centers, where increasing populations will drive the number of small homes and apartments even higher.
- Builders will focus on entry-level homes. In line with the push for smaller living, builders will scale back on the sizes of new homes to focus more on smaller, more affordable housing for new buyers, those looking to downsize, and investors.
- Millennials will move to suburbs in search of more affordable housing. The millennials are growing up, and they’re headed to the suburbs to find better priced homes for their new families. As urban centers continue to grow and development, housing costs in these areas will rise, but salaries won’t increase at the same right.
- Inventory shortages will also cause price jumps. Select markets will begin to see inventory shortages (if they haven’t already), where there simply aren’t enough properties available to meet the growing population/demands. In turn, this will impact pricing, with both purchase costs and rental rates increasing. Fortunately, analysts say that this price jump won’t be as jarring as what we saw in 2017, with home costs rising at a bit of a slower rate.
All in all, 2018 looks like it’s going to be another great year for investors. While you may see shifts in some of the major housing markets, there won’t be any drastic changes from what we’ve seen in 2017. There are a few major markets that look like they’re going to be wide open for investors (Dayton, Vegas), along with some that may tighten up in terms of accessibility for investors (Dallas, San Diego). My advice for heading into the new year? Keep up with current events and trends, build/use your network, and revisit your goals and strategy to make sure you’re staying on track.
Happy Holidays and Happy New Year!