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What to expect in the next decade of the real estate market

Experts believe the real estate market will continue its growth in the next decade.

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The next decade is difficult to predict in real estate due to the unpredictable market.  Nonetheless, if we could paint a picture of the next decade based on today, what will it tell us?  Based on the answers below, a recession isn’t on the horizon, but the results are surprising.

Construction will continue

The U.S. population is over 325 million now, but in ten years, the population will increase by 25 million, including foreigners who migrate here permanently.

This surge is the primary reason for real estate demand. The need for accommodation and a growing, yet stable job market encourages construction on homes and apartments to continue through the next decade.

A steady job market and new homes mean young adults can find employment and save money to buy.

Increase in interest rates

Interest rates started rising in 2016, but the increase didn’t cause any concerns for both buyers and lenders.

In the next decade, the population and job growth is going to affect interest rates. Lenders will increase the rate to attract buyers to buy homes now.

Don’t expect the increase to happen immediately. The increase is happening little by little for the next decade because a huge leap will scare buyers away from home ownership.

Demographic shifts

Priorities in creating families are shifting among the younger demographic. This generation is waiting until their 30s and 40s to create a family, so home ownership isn’t a priority for anyone under thirty.

Student loans are scaring the 20-year-olds away from home ownership too, yet finances mostly stabilize by the time 20-year-olds reach 30 and 40. Expect an increase in 30-year-old first-time homeowners and expect a trade up in their 40s.

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The elderly are also demanding housing accommodations, yet they won’t rent or purchase a second home. Since their focus is on retirement, they’ll downsize into a post-empty nest home. Expect the “second home” trend to decrease due to stubbornness and retirement.

real estate market trends: Construction workers

The real estate market is expected to continue its growth in the next decade. (Source)

Rental decrease

While rental prices are rising and will continue to rise over the next decade, rental demand will stabilize with no growth or decline. Twenty-year-olds will rent temporarily with the idea to purchase a home in the future.  

Renting slows down when adults reach their thirties and decreases as people get older. It’s possible that some adults won’t have the funds to reach home ownership and move back in with their parents instead of renting.  

The warming trend

Expect the southeastern United States to see a double-digit increase in population over the next decade. Specifically, Florida, Texas, and Tennessee will increase over the next decade due to warm weather and tax-free income.  

While the tradeoff is high property taxes or high sales taxes, the reward is worth the risk for many. Georgia and the Carolinas will gain momentum, however. Second place goes to the southwestern United States, as this region will win over young adults. California, Arizona, Nevada, and Utah are the states to watch.  

Fix-and-flip craze fizzles

Investors purchasing fixer-uppers to remodel and resell is going the way of fashion trends. The once prominent niche drove home sales up and eliminated inventories. They were necessary to reduce abandoned and foreclosed homes.  

As construction companies purchase land, tear down the property, and rebuild a new one on top, the fix-and-flip craze will lose its importance and fade.

In closing, it’s nice to visualize the outlook 10 years ahead. It is an indicator of what could happen and gives the industry a chance to turn around any possible issues. Fortunately, real estate remains on the upswing for the next decade, and that’s good news for all parties involved.



DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.

Tonya Jones Reynolds is a freelance writer specializing in real estate, marketing, and money articles for Born2Invest. Some past and present companies she writes for include Blogmutt, YouQueen, Blasting News, Reflect & Refresh, Inman News, Goals.com, and Textbroker. With 7+ years of experience as a freelance writer, she joined Born2Invest as a contributor to help readers make good decisions about their financial and professional lives.

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