As we journey through 2018, there are a growing number of changing trends in the real estate industry, which are altering all aspects of the rental market. Real estate investors, real estate agents, and property managers should all study these growing real estate trends and make the necessary adjustments to their current business strategies, in order to meet tenant expectations and ensure success.
1. Affordability Factors Changing the Rental Market
Two major forces driving the rental market are population shifts and affordability. Affordability has become an increasing issue for many Americans, causing the government to continuously offer affordability programs and tax credits. Many states already posses laws that require a certain fixed ratio of every new apartment building to offer affordability programs and tax credits. For example, the city of San Francisco is spending $44 million for a teacher housing initiative, which will enable more teachers to live and work in one of the most expensive cities in the country.
One of the biggest changes in affordable housing is the growing emphasis on housing choice voucher programs, rather than public housing. This will require property managers to understand and successfully manage affordable housing programs.
2. Technology Shaping the Rental Industry
The use of technology and AI software will bring immense shifts to the rental industry. Technology will alter the rental industry from property valuation to property management. In property management specifically, the use of AI robots are becoming increasingly popular. AI robots can offer tenants better and quicker service, while automating maintenance issues.
Voice technology is also becoming a growing part of property management, allowing renters to pay rent by voice and immediatly make maintenance requests. Technology has also allowed real estate agents to give potential tenants virtual apartment tours, and closing rental deals without the tenant ever stepping foot in the property. Conclusively, real estate professionals who can successfully adapt to growing technology changes and use technology to their advantage, will experience growing success in the coming years.
3. Flourishing Market Opportunities
While the media has focused on trends in moving to particular cities, like Nashville, the truth is, the entire Southeast and Northwest are becoming preferred living destinations. Popular rental markets tend to follow job and population growth. Other growing non-geographic real estate opportunities are senior housing and affordable housing. The population of U.S adults 65 and over will more than double by 2060, hitting 98 million. That will be nearly one quarter of the population, which signifies a substantial demand for senior housing. Many developers and investors have been converting multi-family complexes into independent senior housing communities to prepare for this growing trend.
4. Occupancy Rates Falling
While rent demand is strong in major metropolitan cities, rent demand is slowing in most areas of the United States, especially single family units. As occupancy rates slump, property managers will have to aggressively recruit new tenants, while keeping current tenants happy and encouraging lease renewals. Having strong systems in place to handle tenant emergencies and maintenance requests is crucial to keep tenants satisfied.
Furthermore, there are established legal protections for renters, promising that broken roofs and gas leaks will not leave tenants penniless and homeless. If you decide to purchase property, you are opening yourself up to large risk and liability factors. Unexpected repairs and maintenance issues can quickly drain your bank account. Furthermore, taxes can change quickly and without notice. Even if you decide to purchase a condominium, homeowner's association's fees can increase monthly, only requiring a majority vote. Rentals can also generate unexpected expenses and increases, and may cost more (in the long run), however renters are paying a premium fee to live without financial and monetary risk. Ultimately, your financial situation and comfort level with the risk factors associated with home ownership, will guide your decision.
