The Counselors of Real Estate recently released its annual Top Ten Issues Affecting Real Estate list for 2018-2019, which includes both current and long-term opportunities and challenges. Interest rates and the economy, which may result in limited affordable housing, is cited as the No. 1 issue.
The No. 2 issue on this year’s list is infrastructure. An estimated $4.5 trillion is needed to improve critical infrastructure conditions by 2025, according to the American Society of Civil Engineers 2017 Infrastructure Report Card.
Below is a full list of the top 10 issues:
- Interest rates and the economy: Rising interest rates are resulting in a decrease in demand for commercial property and higher home mortgages.
- Infrastructure: Lack of effort by the U.S. to sustain infrastructure leads to rapidly deteriorating conditions.
- Politics and political uncertainty: Tax reform and policies change the balance of trade, which impacts jobs, incomes and property of all types.
- Housing affordability: Low wages, rising mortgage rates and limited supply results in lack of affordable housing.
- Generational change and demographics: There are four distinct groups influencing the real estate market for the first time in over half a century.
- E-commerce and logistics: Retail sector volatility is due to the growing e-commerce market.
- Disruptive Technology: Robotic manufacturing and driverless cars are both examples of “smart” technology that enable efficiency.
- Natural disaster and climate change: Property and environmental damage are results of natural disasters such as floods, earthquakes and wildfires.
- Immigration: If reduced by law, this will have a negative impact on the real estate market, as well as worsen the skilled labor shortage in the U.S.
- Energy and water: Due to the potential of environmental damage, new state and local regulations put into place may compromise development.
The Counselors of Real Estate also included four issues on its Watch List, which include:
- Construction costs
- Urbanization/Suburbanization
- Tax cuts
- Societal leadership