The last three years have seen a global pandemic, a dramatic decrease in interest rates, and even more first-time buyers trying to break into the real estate market. With recent advances in artificial intelligence (AI) and the continued growth of the sharing economy, the real estate sector is due for more changes.
So, what should you expect over the next decade? In this article, we’ll take a look at current trends and make some predictions for the future.
What effects will shifting demographics have on the housing market?
Millennials Seek Starter Homes and Condos
Millennials, which includes anyone born from 1981 to 1996, are starting families and looking for homes. They now make up the majority of the workforce, meaning they have the financial stability to dive into real estate.
This demographic was slower to form their own households than previous generations, waiting longer to marry, have kids, and purchase their first home. In 2023, however, they have fully entered the housing market. This has led to an increased demand for starter homes and condos at reasonable prices.
Increased Immigration Means Increased Need for Rentals
Increased immigration is also affecting the housing market. Immigrants settling in Brantford, ON and the GTA, for example, are looking for affordable rental properties, preferably close to their communities, families, jobs, and educational institutions. There is a lesser but still present demand for ownership accommodation, as some immigrants look to own rather than rent.
Baby Boomers Are Staying in Place Instead of Selling
Ageing baby boomers are having a huge impact on Canada’s housing market. Baby boomers are getting older and retiring; however, that does not mean that they are selling their homes. Many are opting to remain in place, modifying their existing family homes to suit their changing needs.
Previously, ageing generations chose to downsize by moving into smaller homes or retirement communities. This released valuable real estate to new households, like millennials.
With baby boomers hanging onto their homes, fewer houses are being listed. This is creating something of a bottleneck. The supply of homes cannot meet the demand of buyers. Prices are being driven up, threatening to price first-time home buyers out of the market.
How will sustainability be included in the real estate sector?
People want to go green. Sustainability has become a major consideration for all industries, including the real estate sector. There’s no doubt that green construction will be an integral part of Brantford’s real estate market over the next decade!
Still, what is the future of sustainable housing? Let’s take a look.
- Sustainable building. Traditionally, new home construction has come with a large carbon footprint. Sustainable building practices will decrease the carbon emissions associated with each new home. From design to construction to operation, green homes will become the norm.
- Green materials. Ethically sourced, green building materials are key to reducing the carbon footprint of residential properties. Sustainable homes will use more low-carbon materials like reclaimed lumber, hemp, and bamboo.
- Decarbonized homes. Sustainably built homes and green technologies will continue to lower the carbon footprint of individual buildings. These houses conserve and use resources more efficiently. They also utilize energy-efficient technologies like smart devices and appliances.
- Biodiversity. Future real estate constructions will have to make preserving biodiversity more of a priority. Planning authorities are already imposing increased sustainable and biodiversity requirements.
- New high-tech and green developments. There are multiple new, exciting, and sustainable real estate projects in the works in Toronto. These residential developments combine technology, sustainable construction, and green spaces to create neighbourhoods of the future.
What changes will technology bring about in the real estate market?
It’s impossible to gauge the impact that technology will have on the world over the next decade. Needless to say, it will be significant. Technology has already started to change the real estate market, and its effects will only continue to grow.
Here are some of the technology trends that will shape the real estate world:
- Marketplaces. Marketplaces are a major disruptor in the real estate market because they serve as an intermediary between buyers and sellers. Historically, real estate agents have been the bridge between people selling and people buying. As online marketplaces continue to grow, more real estate purchases will occur online without the help of real estate firms.
- Big data. Real estate companies will harness big data to target the right buyers, refine the real estate process, and personalize customer experiences. Using data, real estate software can recommend smarter, better, and more personal searches.
- Artificial intelligence. Artificial intelligence will change the real estate industry. It will help analyze data, identify trends, provide risk assessments, and automate processes. Plus, it can understand client needs, making it easier to find the right properties for the right clients. AI personal assistants and conversational chatbots will also become prominent.
What impact will the sharing economy have on the housing market?
Holiday Rentals Instead of Homes
The sharing economy takes many forms. For instance, Airbnb (and other similar platforms) has dramatically impacted the housing market and will continue to do so in the future.
When individuals choose to fill their properties with short-term rentals instead of long-term tenants, it’s easy to end up with a housing shortage. Simply put, when normal properties turn into holiday rentals, there are fewer places for residents to live.
Higher Property Prices
Decreased supply increases demand and leads to price hikes. Real estate investors purchase properties for short-term rentals, resulting in fewer houses for local buyers. This is one of the major contributors to rising house prices. Barring a crackdown from local regulations, this trend will continue.
Increase in Co-living
Co-living is nothing new. People have been sharing houses, apartments, and condos to save money for decades. However, technology and the new sharing economy have made it easier than ever to find co-living arrangements. This fact, combined with rising residential prices, will likely result in more people choosing co-living over renting their own homes.
The Future of Real Estate: Too Much Demand, Not Enough Homes
Currently, there is a mismatch between the number of buyers and the number of homes on the market. Unfortunately, this trend is likely to persist in the coming years.
New households, headed by millennials, are looking to put down roots in a home of their own. Ageing baby boomers, however, are choosing to stay in place rather than sell their homes to first-time buyers. This heightened demand and reduced supply is raising prices.
Similarly, the sharing economy is also limiting the supply of homes on the market. Short-term rentals are replacing long-term accommodation, threatening to further increase prices.
With that said, technological advances, such as AI, will make it easier to successfully pair buyers and sellers. This might prove advantageous in a real estate industry that is likely to become even more competitive in the future.
Devon Graham is a blogger in Toronto. He graduated with honours from the University of British Columbia with a dual degree in Business Administration and Creative Writing. Devon Graham is a community manager for small businesses across Canada. He also likes to research various topics related to pets, food, storage solutions and business solutions.