No. 1 – Rents and home prices will moderate
In 2018, average home prices and rents will begin to moderate across the country after years of steep growth. This slowdown is part of our economy’s natural cycle: When home prices and rents reach unsustainable rates, our economy seeks equilibrium through price correction until the supply can catch up to the demand
“The inflation we’re seeing in home prices may feel reminiscent of the housing bubble we experienced a decade ago. However, our more conservative home buying and lending process now prevents consumers from paying far more than a house is worth, or more than they can reasonably afford. Because the growth we’re seeing isn’t unrestrained like it was in the mid-2000s, we’ll see a slow and steady glide toward more reasonable rates rather than a crash,” Buildium.com writes.
No. 2 – Secondary markets will rise
Primary markets that have seen extreme price growth in recent years—particularly San Francisco and New York City—will gradually glide back down to more sustainable long-term rates. Meanwhile, secondary markets like Raleigh, Charlotte, and Nashville will see an uptick in interest in 2018 as renters, homebuyers, businesses, and investors discover more affordable spaces in smaller cities.
No. 3 – Construction Labor Shortage
In 2018, an already-tight housing market will continue to feel the impact of the diminished construction labor force. Affordable single-family homes will be hard to find, with new construction failing to meet the demand; current homeowners staying put for fear of entering a contentious market; and available homes selling at record speeds. We should also anticipate rebuilding efforts following natural disasters to become a regular strain on the construction of new single-family homes
During the last recession, many migrant construction workers left the country in search of jobs; and today, restrictive immigration policies keep them from coming back. In addition, younger workers aren’t entering the industry as quickly as older workers are leaving. 1 in 3 construction jobs remains unfilled, which slows homebuilding and drives up workers’ wages—ultimately shrinking developers’ margins. In order to make a profit, developers are forced to build luxury properties that don’t address the demand for affordable homes. Natural disasters further worsen the housing shortage by diverting labor and materials to rebuilding rather than creating new homes.
No. 4 – Amenities and concessions
A dog spa is one type of amenity going into some apartment complexes to draw millennial tenants
Because home and rent prices in primary markets like New York and San Francisco have peaked, property managers and landlords will no longer be able to compete on rents without hurting their margins. Instead, in 2018, property managers and landlords should consider which amenities and concessions they can offer to remain competitive in attracting new residents and retaining current ones. If a new dishwasher or a free month of rent helps you to keep reliable residents in place—particularly when you divide that cost by the length of the lease—it’s often a worthwhile investment.
After a flurry of multifamily construction in 2015 and 2016, new apartments are coming online across the country. As new supply is absorbed in hot rental markets like New York and San Francisco, vacancy rates are rising and rents are moderating in comparison with the peak levels they recently reached.
No. 5 – Opportunity for investors and property managers
As newly completed units come online in secondary markets like Charlotte, Raleigh, and Nashville, strong rent growth and rising occupancy rates present a great opportunity for property managers and investors looking to grow their businesses in 2018.
No. 6 – Technology opportunities
In 2018, technology will continue to present major opportunities for property managers to differentiate their businesses from the competition. Renters of all demographics want convenient ways to communicate with you, pay their rent, sign leases, report maintenance issues, and more. A smart strategy to attract and retain residents in 2018 should include digital capabilities like mobile communication, electronic payments and leasing, online maintenance ticketing systems, and similar technologies. In addition, consider adding technologies like smart thermostats, locks, security systems, and personal assistants to your units.
Technology is the future of every industry, and that includes property management. Mobile devices are changing the way we communicate and do business, and the Internet of Things is putting smart thermostats and personal assistants in the homes of millions of Americans. For property managers, leveraging these innovations may be the key to attracting and retaining residents in the coming years.
No. 7 – Renters becoming more diverse
Renters will only become more diverse tomorrow than they were yesterday. This broadening of demographics challenges property managers to adapt their amenities to cater to all ages and abilities. In 2018, an apartment building may be home to a single young professional living with roommates; a family whose credit prevents them from becoming homeowners; and a retired couple who could no longer justify the costs and upkeep involved in owning a home. Listening to your renters’ diverse needs and adapting your properties and services to attract and retain them in the long term has never been more critical to the success of your business.
Millennials are entering the housing market, but they aren’t becoming homeowners at the same rate as previous generations. This is due to factors like student debt, tight credit standards, the affordable housing shortage, and the disparity between wage growth and rent growth. Meanwhile, many Baby Boomers are retiring, downsizing, and becoming renters, resulting in a wide range of needs and expectations among today’s residents.
Original Source: What to Watch in 2018: 7 Predictions for the Housing Market & Property Management Industry, Buildium.com