There are currently a number of factors, such as weak financial standings of consumers and lack of available credit, hindering the real estate market, but there also many long-term developments that could impact housing.
The Counselors of Real Estate, an international group of industry professionals, recently convened to shed light on these factors, which range from demographic trends to global uncertainties. However, buyers of both residential and commercial real estate may be able to get the drop on the competition in the future if they keep the following factors in mind.
"If you pay attention to them you will be able to beat the market," said Counselors of Real Estate member and president of the Muldavin Company, Scott Muldavin, according to MarketWatch.
The total student debt load recently surpassed $1 trillion dollars, with the average individual graduating with close to $25,000 in loans. As these young adults enter a job market plagued by stagnant wages, a significant portion of their incomes will have to go toward these payments.
In the past, many graduates didn't have the burden of student debt, and instead put this money to better use, including saving for a down payment. Record numbers of young adults are now moving back in with their parents once they leave school as a result, which is already having an impact on the housing market.
Every year, more Americans from the baby boomer generation are approaching retirement, and experts say this will impact the real estate industry for quite some time. There are currently an estimated 72 million consumers in this generation, according to the Population Reference Bureau, and as they age, the demand for multifamily senior housing is expected to surge over the next two decades.
"We're talking about such a giant wave of elderly people who have different ways of doing things, which will impact how we design facilities," Muldavin added.
In addition, the demand for new healthcare facilities is also expected to increase along with this aging population, which could also have a significant impact on the commercial real estate industry.
Global economic uncertainties
The European debt crisis and a recent slow in the growth rate of the Chinese economy are already affecting the financial safety and soundness of real estate developers. Should investors continue to flock away from foreign markets to more secure options, such as 15-year Treasury bonds, which weigh heavily on mortgage rates, borrowers may have affordable options for years to come.