The Counselors of Real Estate, an advisory organization that monitors real estate, released its latest report detailing the top 10 issues affecting the real estate industry. This year, the organization divided its annual list to focus on five issues currently impacting the industry and five issues to watch for potential long-term impact over the next three to seven years.
While speaking at the National Association of Real Estate Editors spring conference today, CRE Chair Joseph Nahas discussed the organization’s list and the issues it is raising red flags on.
Leading the list of current issues to watch is interest rates and the economy. While interest rates continue to climb, both the commercial and residential real estate markets are feeling changes.
Nahas explained that the issues the real estate industry will see in the future are beginning to happen today. Leading the list of long-term issues impacting real estate is infrastructure – and what the organization says is a lack of effort by the U.S. to address deterioration.
These are the five issues impacting real estate right now:
1. Rising rates and the economy
As we saw today, the Fed raised rates for the second time this year. CRE’s report said that increasing rates exacerbate the affordability crisis and has stakeholders concerned about a potential recession in 2019-2020, which would impact jobs.
“Rising rates can actually be good – and bad – for the economy,” Nahas told the audience. “They’re bad when they increase costs. They’re good when they monitor business activity and keep inflation in check. The thinking in today’s environment by the Fed is the latter, he said “It may be painful in the short run. We may have a slower number of new home purchases or resales, or higher mortgage rates but inflation won’t get out of control.”
2. Politics and political uncertainty
Nahas explained to attendees that the mid-term elections could change the balance of power and with it, policy. “The 2018 elections are going to be telling because they’re going to determine whether or not the policies of the current administration are going to be maintained,” he said.
3. Housing affordability
The group pointed to wage stagnation, gentrification and a low supply of affordable homes and apartments, plus two decades of housing underproduction that has dramatically impacted the residential housing market. “The local control of housing decisions…