Silicon Valley REALTORS® learned that housing affordability, demographic shifts and e-commerce's impact on retail spaces are among real estate's top pressing issues heading into 2017 at the 2016 REALTORS® Conference & Expo held in Orlando, Fl. this month.
At a forum on emerging trends affecting real estate, Scott Muldavin, 2017 chair of the Counselors of Real Estate, and Peter Burley, chair of the group's external affairs committee, shared 10 top issues that will define the real estate industry in the upcoming year. They include the changing global economy, debt capital market retrenchment, demographic shifts, densification/urbanization, the political environment, housing affordability and credit constraints, the disappearing middle class, energy, the sharing and virtual economy and the rise of experiential retail.
Both speakers noted geopolitical and economic uncertainty, volatility in the energy markets and weaker trade volume could slow U.S. growth and lead to fewer job gains in the year ahead. If prominent and prolonged, these developments could have the potential of eventually impacting real estate.
"The good news is that even with U.S. economic expansion at around 2 percent, the U.S. is still outperforming other major countries around the world," said Muldavin.
Burley said demographic shifts are also poised to transform the real estate industry. A growing share of millennials entering their mid-30s will be getting married and eventually have children, strengthening the demand for buying a home. Meanwhile, baby boomers' tendencies to age in place creates opportunities for commercial real estate in the form of medical and assisted living facilities development.
Burley said the tight inventory has made purchasing a home more expensive. Many buyers are competing for homes in the same places, and while apartment construction has ramped up, rents are still outpacing incomes in many communities. This only adds pressure for aspiring home buyers trying to save enough money for a down payment.
Suburbs area also pressured to become more urbanized. Those living in the suburbs still want to be within distance of walkable areas with a variety of activities. This has resulted in the suburbs striving to become more urban-like with mixed-used developments and office space.
"Suburban areas are adding urban amenities so that there's an environment where people can live, work and play right outside of the core part of the city," said Burley.
In the commercial real estate retail sector, the rapid rise in online shopping has led to major retailers closing stores and shrinking their store footprints. One emerging trend is a smaller "showroom" space with an online component, where consumers can buy at the store and have the item shipped to their home within a few days. Another shift is many new construction projects are mixed-use, with a variety of retail, food and housing because retailers want to be near walkable residential areas.
Karen Trolan, president of the Silicon Valley Association of REALTORS®, and members of the local trade association's leadership team, joined the more than 19,000 REALTORS® at this year's national REALTORS® conference. Trolan said, "These trends are already taking place in our own region. Communities are responding to the need for more mixed-use developments with retail, office and a housing component. Amazon now has pop-up stores in shopping malls around the country, one of which is in San Francisco and another in Santa Clara. Target and Wal-Mart are also opening smaller shops close by."
"By understanding these emerging trends, especially those taking place in local neighborhoods, REALTORS® can help advise individuals and families who are looking to buy or sell a home," added Trolan.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.