A market as large and dynamic as real estate in the United States rarely moves quickly. The most noticeable account running throughout the annual Emerging Trends report from the Urban Land Institute is the sense of stagnancy. Although economic and political uncertainty have made things feel unmoored, the overall understanding is that we’re in for a soft landing, not a sudden crash.
Top ten markets present little surprise
Predictions for the top 10 markets for 2020 favor large and mid-sized metros in the “smile states” (west and east coast, plus the Sun Belt). The cities on the list have benefitted from a combination of tech-driven growth and booming populations: Austin, Raleigh/Durham, Nashville, Charlotte, Boston, Dallas/Fort Worth, Orlando, Atlanta, Los Angeles, and Seattle. The next 10 on the list include a few smaller metros, such as Charleston, Portland, and Indianapolis, as well as suburban areas such as Orange County in California and Northern Virginia, which expects to see a big bump from Amazon’s new headquarters.
The great housing unraveling
Disparity has become a feature of our current housing market. Rent and home prices have skyrocketed, becoming untenable in markets nationwide; there’s no county in the country where a worker clocking in 40 hours at minimum wage can afford a two-bedroom apartment.
The affordability issue has so warped local economies that even big tech giants, such as Google and Microsoft, have pledged millions of dollars to help fund affordable options. Candidates on the campaign trail have taken note, making housing a bigger issue than it’s been in decades.
The trend toward community-oriented development is here to stay
The future of shared commercial space, however, is bright. The number of urban green markets shows the continuing appeal of foodie-centric public spaces. Collaborative consumption—integrated platforms of products, services, and experiences—is increasingly popular with younger generations favoring sustainability and social interaction. As traditional retail continues to struggle, this type of business can be a big draw for a larger project.
As more millennials become parents of school-age kids, and urban areas continue what seems like a relentless rise in real estate prices, there’s a slow but steady push toward the suburbs. But, in what is being dubbed “the rise of Hipsturbia,” hot locations outside of big cities are evolving. In addition to being more diverse, they’re also becoming more walkable, with developments that favor density, retail, recreation, and transit access. This has developers taking the live/work/play formula that revived downtowns to the ’burbs, with much success.
The “silver tsunami” of senior housing
Life expectancy has risen overall as the baby boomer generation begins to enter prime retirement years. The number of Americans over 80 will double, from 6 million to 12 million, in the next two decades, and by 2035, one out of three U.S. households will be headed by someone over 65. The last boomers won’t turn 80 until 2044. This will mean a huge flood of seniors looking for a variety of housing options, including active lifestyle living and upscale urban apartments. There are huge implications for housing, both in terms of renovations for those who want to age in place, and new options for seniors looking for a new post-retirement lifestyle.
The slow and steady march of technology
Technology in real estate has been on the verge of a breakout for years. In addition to the increase of iBuyers and new tools to digitize the home-selling process, companies are developing new products to simplify management, such as package delivery and digital concierges. Smart homes, especially digital assistants and security cams, are increasingly common.
There may be less abrupt changes in 2020, but that doesn’t mean some of the trends emerging this year won’t become breakout investments in the near future.