Real Estate Industry News

The real estate market has been in flux in recent months, thanks largely to the Covid-19 pandemic. The demand for housing is only increasing as people leave major cities in favor of quieter suburban “work from home” settings with more space. At the same time, labor and supply chain shortages have made the future of construction uncertain, and real estate professionals must be prepared for how this uncertainty will impact their markets.

As industry leaders, the members of Forbes Real Estate Council have their fingers on the pulse of upcoming trends in real estate. Below, 13 of them shared their expert predictions for construction growth, including potential surges and declines in certain markets.

1. Collaboration Is Needed Across Sectors

Rising construction costs, material shortages and labor issues have been greatly intensified by the pandemic and are significantly impacting the affordable housing industry. By working with our industry peers and public sector partners, we can address these issues and move quickly to construct quality, affordable homes that are urgently needed. We are proudly engaged in this effort. – Jeremy Bronfman, Lincoln Avenue Capital

2. Decreased Supply Won’t Last Long Term

What we see now is that the supply is lower than the demand for new homes in the U.S. housing market. One of the reasons for this is the pandemic-related increase in prices for construction/building materials which is slowing down construction growth. Fortunately, this won’t affect the market in the long term as prices are predicted to go down in a few years. – Joseph Edgar, TenantCloud


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3. The Standards Of Housing Are Changing

I think that the price of housing is too high and with a little uptick in interest rates, the market will slow. I also think buyers are going to place more importance on the home after Covid and expect a home office as standard. The demand will decline as the economy slows, inflation increases, wages do not keep up and most importantly, interest rates rise. These rates are tied to the bond market. – Steven Minchen, Minchen Team

4. The Market Will Continue To Surge

The real estate market should continue to surge in the foreseeable future due to a plethora of reasons. Housing construction still has not caught up with demand. Desirable neighborhoods do not have enough space to build more housing due to government regulations and NIMBYism. The FED and the government are continuing to keep interest rates low and extending eviction moratorium to avoid catastrophe. – Ron Costa, The Eighty Two Group

5. Buyers Will Have More Flexibility

Smaller markets nearby large growing markets where home prices and the cost of living is lower should continue to do well. With companies being more friendly to working remotely, at least part-time, buyers have more flexibility with the distance of their home and work. – Chris Bounds, Invested Agents

6. Rezoning Could Add More Inventory

Construction is lagging thanks to the pandemic, which is contributing to the inventory problem we have across the country. By rezoning existing construction, cities could quickly add inventory to a market that is behind on construction. For example, cities could rezone an office space—since demand for offices is also lagging—and turn them into urban lofts that are perfect for young professionals. – Jennifer Anderson, Anderson Coastal Group

7. Supply And Demand Will Eventually Even Out

All markets follow basic supply and demand economic principles. We’ve seen the current real estate/construction boom play out in the past. Homebuilding has been underproducing homes for the past decade, and the shortage of homes has reared its ugly head over the last couple of years. But eventually, supply will catch up, demand will wane and the market will shift toward home buyers again. – Nick Ron, House Buyers of America

8. Bidding Wars May Continue In The Foreseeable Future

In March 2021, monthly housing starts—a key economic indicator—hit their highest levels since June of 2006. That same month, the 10-year treasury rate also hit a recent peak. Historically, as interest rates rise and borrowing becomes more price-prohibitive, residential real estate tends to cool. Both key indicators have since pulled back, continuing to fuel bidding wars in this red-hot market. – Tara Hotchkis, Compass

9. An Affordability Crisis Is Imminent

Construction has been lagging for the last 20 years and compared to the 20 years prior to that. We have been undersupplied for years based on the growing demand which will take years to stabilize. Labor and costs will continue to go up, so the sizes of houses and rental units will come down to meet affordability. We are heading into an affordability crisis in the next five years. – Ken McElroy, MC Companies

10. Certain Markets Are Seeing Increased Demand

I see markets such as Toledo, Ohio experiencing a lot of demand. It is one of the few locations around the nation where an investor can find a family home for less than $100,000. Individuals working low-income jobs can still afford to save enough for a down payment and acquire a house. – Saurabh Shah, InstaLend

11. Mortgage Rates Will Rise

Eventually, it seems inevitable that mortgage rates will start to rise, though I don’t foresee a drastic hike. If the former happens, this will impact the market, but even if rates go up, real estate is always a good investment. If you’re buying and holding, you’ll still win in the end. – Kevin Markarian, Marker Real Estate

12. There Will Be Overall Construction Growth

This is a multifactorial issue, it will definitely put more pressure on tertiary markets while the supply and demand of labor can be more favorable for larger cities where the margins can support the rising labor cost. With an overall focus on infrastructure, it seems like we are going to see overall growth in construction. – Chander Mishra, Blue Ocean Capital LLC

13. The Development Approvals Process Will Become More Streamlined

Low inventory levels underline the need for municipalities to address chronic shortages of housing supply. Other issues include approvals barriers, supply chain disruptions, massive levies and taxes, skilled trades challenges. All frictions of the development approvals process should be eliminated to ensure that the new homes the region needs are being built to address the forecasted demand. – Elik Jaeger, SuiteSpot Technology