The real estate market is always in flux. At one moment, property values can skyrocket and become practically unaffordable for the average person. But then you might turn around and a housing crash could become imminent. This isn’t a prediction but something that can potentially happen because we’ve seen it happen before.
On the other hand, certain trends have a major impact on the real estate market. When it became trendy to rent near Central Park, real estate prices went through the roof in the area. And since Manhattan is the hub of financial activity in the Western world, the prices have remained high for many years.
Other trends can also have a positive or negative impact on real estate on the whole. We’ll look at three of them today in greater detail.
1. Interest Rates Are Rising
It’s nearly impossible to predict whether or not the Federal Reserve will raise or lower interest rates. But for the most part, 30 year mortgage interest rates are currently at around 4.5%, but they are projected to go to around 5% by the end of the year.
More than likely, the Federal Reserve isn’t going to raise interest rates too high in the near future. In fact many people believe that the country is about to enter into another recession.
A potential recession is obviously going to have a negative impact on the housing market. If more and more people begin to struggle paying their mortgages, more people will get foreclosed and the housing market will begin to lose value due to the trickle-down effect.
2. Second Cities And Suburbs Are Becoming Bigger Markets
As you undoubtedly know, it’s becoming way too expensive for average income earners to live in some of the biggest cities in the US like San Francisco, Los Angeles, New York, Denver, and many other expensive sections in California in particular. So some of the smaller more centrally located suburbs are beginning to become developed and they are certainly a lot more affordable than living in the big city.
If you want to live in Norwalk CT, as an example, it’s going to be a lot less expensive to move there than it would be to live in New York City. While not exactly the suburbs of New York, it’s still relatively close by if you’re willing to commute in and out of the city if you happen to work in Manhattan.
As a matter of fact, in 2016 in 2017, nearly 3 million people moved out of bigger cities and into the suburbs. These smaller houses in smaller communities are much more affordable and they are about to dominate the housing market in a big way, so get ready to sell your hearts out real estate agents living and working in these areas.
3. Artificial Intelligence Has Game Changing Potential In Real Estate
Many of today’s hottest tech companies are using artificial intelligence to analyze the real estate market. They are taking their latest tech advancements and integrating it into their research and development.
As an example, some companies are using AI to analyze behavior that takes place within a shared office. By analyzing this behavior, they can provide better office space with redesigned layouts that can better meet the needs of their customers. This is only one of many potential ways to use artificial intelligence to improve the overall real estate industry. It’s also good for building safety, efficiency, and security as well.
Final Thoughts
Whether you plan to buy a house to live in, or you intend to cash in fast on your property, just know that the real estate market is constantly changing. Interest rates fluctuate, artificial intelligence provides added benefits, and buyers are coming in and out of the market all the time.
When the economy is good, it’s easy to buy real estate. When the economy is bad, it becomes nearly impossible to buy or sell property. Just know that the real estate trends mentioned above definitely play a big role in the current market. So please use this information to your advantage the next time you plan to buy or sell your property in the near future.
