It’s critical for buyers, sellers, and investors to keep up with developments in the real estate market because it is a dynamic industry that is continuously changing and evolving. In this article, we’ll examine the real estate market outlook and offer some predictions for the following five years.

1. Home Prices Will Continue to Rise

The increase in property prices is one of the most notable developments we’ve noticed in recent years. Over the subsequent five years, it is anticipated that this trend will continue, with an estimated 5% yearly growth in property values. Thus, by 2028, the national average price of a home might be $363,000 in the US.

This pattern is influenced by several different causes. The low supply of available homes is one of the main causes. Considering that there are fewer homes available, purchasers must compete for them, which raises the price. Furthermore, the ease with which people can now purchase homes thanks to low mortgage rates and a robust economy has increased demand and further raised prices.

2. Millennials Will Continue to Shape the Market

In the United States, the millennial generation is the largest, and the real estate market is rapidly shifting in their favor. These individuals will continue to have a large impact on the market as they age and settle down.

The inclination of millennials for urban living is one of the most significant ways that generation Y is influencing the real estate industry. Many millennials like living in urban neighborhoods with good walking access to places of employment and leisure. As a result, urban housing demand is on the rise, as is a revival of city living.

Their preferences for technology are another way that millennials are reshaping the industry. Millennials are technologically adept and expect their houses to follow suit. Among this group, smart home technology is becoming more and more popular, including automated lighting, thermostats, and security systems.

3. The Rental Market Will Remain Strong

For the following five years, it is anticipated that housing values would climb further while the rental market will also continue to be robust. This is due to the fact that a large number of people opt to rent rather than buy, either because they are unable to afford to buy or because they value flexibility more while renting.

With annual rises of about 3%, rental rates are consequently anticipated to climb during the following five years. The expansion of landlords’ and investors’ rental portfolios is made possible by this excellent news.

4. Commercial Real Estate Will Rebound

The pandemic had a significant negative impact on the commercial real estate sector, causing some enterprises to shut down, while others downsized or shifted to remote work. The commercial real estate sector, however, is anticipated to revive as the economy keeps growing.

Industrial real estate is one sector of commercial real estate expected to experience rapid growth over the following five years. In order to handle online purchasing, there is a need for more distribution centers and warehouses, which has resulted in the rise of e-commerce.

5. Sustainability Will Become More Important

Over the next five years, it is anticipated that sustainability will continue to grow in importance as a market element in real estate. Developers are reacting to the growing demand from buyers and tenants for energy- and environmentally-friendly houses by including sustainable elements in their developments.

Solar panels, energy-efficient appliances, and green roofs are a few of the sustainable elements that are rising in demand in the real estate market. These characteristics lessen the environmental effect of homes and buildings while simultaneously lowering energy expenses.

6. Technology Will Continue to Transform the Market

From property searches to closings, technology is changing every facet of the real estate market. For the following five years, it is anticipated that this trend will continue, with even more technological developments accelerating, streamlining, and facilitating the real estate process.

Virtual and augmented reality are among the fields where technology is anticipated to have a big impact. Several property developers have already started to make virtual tours of their listings using virtual reality technology, giving potential buyers the opportunity to look at houses and apartments from the comfort of their own homes. In the next years, it should be simpler for purchasers to inspect properties remotely as this technology spreads even farther.

For the next five years, the real estate industry is anticipated to continue expanding and changing, with growing housing prices, a robust rental market, and a recovering commercial real estate market. Due to millennials’ preferences for urban life and technology, the market will continue to be shaped by them, and sustainability will play an ever-more-important role. The market will also continue to change due to technology, which will speed up and streamline the purchasing and selling of homes. For buyers, sellers, and investors, it’s critical to be informed and adjust to market trends as the industry continues to change.

F2H Capital Group is a debt advisory firm specializing in negotiating the best terms for your commercial real estate projects. The company offers a range of financial products and services, including fixed loans, bridge loans, and construction loans across all asset types. Please contact us for any of your financing needs.