Real Estate

The real estate industry is subject to fluctuations of the economy. Low interest rates encourage people to seek mortgages and buy property, which stimulates the real estate industry. The real estate market can be strong in some parts of the country and weak in other parts of the country. Often, an area will be strong for a certain amount of time, followed by a decrease in the number of real estate transactions.

The coronavirus pandemic, which started in late 2019, had a significant impact on the U.S. real estate industry. The business lockdowns and social distancing requirements forced many people to spend more time at home, which in turn led many people to realize they wanted to live elsewhere, generally with more outdoor space and in less congested neighborhoods. Those who could afford to move during the pandemic did so. The National Association of Realtors, in fact, reported that by late summer 2020, sales of previously owned homes in the U.S. had increased by nearly 25 percent. This growth continued in 2021, when 6.12 million homes were sold in the U.S., reaching the highest value since 2006 and capping the end of the surge. By 2022, the market started to cool and the number of U.S. home sales dropped to 5 million, due to steep mortgage rates and the high price of homes. As of November 2023, the U.S. real estate sales and brokerage industry was valued at $214.9 billion, with 1 million businesses employing more than 1 million people. Post pandemic, the industry is expected to rebound and experience steady growth through 2028.

The U.S. Department of Labor indicates that there will be modest growth in overall employment in the real estate industry in the coming years, with real estate brokers and sales agents projected to have 3 percent job growth through 2032, about as fast as the average for all occupations. Technology is improving the productivity of agents and brokers. Real estate companies and sellers have made most information available on the Internet and agents are able to serve a much larger number of customers. The use of advanced technology is likely to discourage part-time and temporary real estate work because of the investment costs and the competition with full-time workers.

The U.S. Department of Labor forecasts job growth for brokers and agents will align with the real estate market. Due to increased real estate prices and tighter regulations on credit, people may continue to rent their homes, which could result in fewer jobs for real estate brokers and agents. People will continue to need brokers and agents to find homes, however, whether they are first-time home buyers, searching for a larger home, relocating for a new job, or other reasons. As the job market improves and consumer spending rises, there will be increased demand for brokers and agents to handle commercial, residential, retail, and industrial real estate transactions. Another factor that may contribute to job growth is that within the next decade, millennials will be in the job market and of household-forming age. Their entry into the housing market will increase the need for real estate agents and brokers.

There is a trend among real estate customers to want more of a partnership with their agents instead of turning over all aspects of transactions to their agents. Agents who are willing to be flexible in how they serve clients will be more successful. Competition will be keen for beginning brokers, and their success will depend on their personal drive and motivation to make sales.

Opportunities should be good for experienced property managers. The Department of Labor predicts that property, real estate, and community association managers will have 5 percent employment growth through 2032, which is faster than the average for all occupations. Employment growth is expected because property management companies are operating more residential buildings, such as apartments, condominiums, cooperatives, planned communities, and senior housing. Also, new properties are being created that offer community services and have jointly owned areas that are managed professionally by community or homeowner associations. The DOL points out that "growth in the single-family housing market may have a positive influence on demand, as some new housing developments will require property managers to oversee jointly owned common areas, such as pools, gyms, and business centers, and to oversee homeowner association laws."

Property managers who hold a bachelor’s degree in business administration, real estate, or a related field and/or who have professional certification will have better odds of securing work. Job opportunities are also expected to be good for property managers who have experience in managing housing for older people or with managing healthcare facilities. The aging population will affect residential and commercial real estate in the coming years. More baby boomers are starting to retire and the demand for multi-family senior housing and other facilities is increasing. Property managers and other real estate professionals will be needed to meet the needs of this growing age group.

Millennials are also expected to play a larger role in the real estate market in the 2020s. The PricewaterhouseCoopers (PwC) "Emerging Trends in Real Estate" predicts that although this demographic has postponed homeownership, their attitude could change as the economy continues to stabilize. The smaller Generation Z, born after the millennials, is also expected to affect the real estate market down the road, according to the PwC report. "Planning for a nation with lesser household formation, fewer new consumers, and a meager number of workforce entrants is the challenge ahead for a real estate industry with its eye on the 2020s." Generation Z is entirely focused on the virtual world because they’re growing up with the Internet, smartphones, tablets, wearable tech devices, etc. They’re technologically savvy and accustomed to having instant access to data. Real estate professionals need to be prepared for this group.

The outlook for real estate appraisers and assessors is bright. The Department of Labor predicts 5 percent employment growth through 2032 for this group. Mobile technologies are helping appraisers assess and appraise properties more effectively. Workers have also improved their productivity through the use of automated valuation models that help with property appraisals for mortgages.

Employment opportunities for real estate appraisers and assessors will be best for those with experience and certification, and in areas with active real estate markets. The demand for appraisals decreases during times of recession, when fewer people buy or sell real estate. Appraisers and assessors who have a flexible approach to their work and can appraise different types of properties rather than specializing in one area improve their chances of landing jobs.

The U.S. commercial real estate sector is expected to have modest growth through 2028, according to the market research group Statista. Compound annual growth of about 2.7 percent is predicted from 2023 though 2028, reaching a market value of $28.18 trillion by 2028. Commercial real estate growth is determined by population growth, local economy, interest rates, and government policies. A growing number of companies are seeking warehouses and fulfillment center space, to meet the growth of e-commerce since the pandemic. Remote work has also continued to be popular since the pandemic, which means that more companies will be looking for smaller offices and flexible office spaces.

A stronger labor market and increasing household formation can help to increase the demand for commercial real estate. However, as office rental vacancies are projected to increase, there will be a slowdown in construction of new commercial properties. Higher interest rates are projected to continue and with the Federal Reserve leaving interest rates unchanged, builders will have fewer funding sources for commercial real estate projects.

The residential real estate sector is expected to have modest gains. In a report by Statista, compound annual growth of 5.23 percent was predicted from 2023 through 2028 in the U.S. residential real estate market, reading a market value of $114.7 trillion by 2028. According to the report, a critical trend in this sector is the rising price of homes, coupled with other factors such as the rise in mortgage rates, high demand from buyers, and a limited supply of homes. Homebuyers, particularly those in major metropolitan areas, will be facing these challenges in the next few years.

The National Association of Home Builders (NAHB) reported that housing affordability will continue to be of top concern in the United States. The exurbs and outer suburbs are the only region that has had continued growth in registered single-family homes. (Exurbs are the outlying counties of large metropolitan areas with 1 million or more residents.) Nationally, about 18 percent of single-family home construction comprises the exurbs and outer suburbs, and steady growth is expected to continue. The challenges that will continue in this sector include finding buildable land and skilled labor. Overall, the NAHB foresees a turning point in housing affordability, as the previous building material supply chain bottlenecks start to fade and construction costs come down. Once the mortgage rates start to lower, conditions will improve overall for the residential real estate market.