Several rising market segments may offer growth opportunities for your real estate business in the new year. Robyn Erlenbush, a broker-owner at ERA Landmark Real Estate in Bozeman, Mont., and Amy Chorew, vice president of learning at Better Homes and Gardens Real Estate in Madison, N.J., highlighted many of these areas at a Saturday session during the 2018 REALTORS® Conference & Expo. Some of the customer segments to watch are:
1. The urban boomer
Erlenbush and Chorew highlighted the growth of the “urban boomer,” the baby boomers who are choosing to retire in downtowns and urban areas rather than suburban communities. Baby boomers are desiring to be close to shopping, dining, and the arts and culture scene, they said. About 8,000 baby boomers are retiring every day, and where they’re choosing to retire is a hot segment for real estate professionals to watch carefully, Chorew said.
2. The international buyer
The international buyer is still a big part of the housing market, despite their slightly shrinking numbers over the last year. Chorew credited the drop to political tensions globally, unfavorable exchange rates, and rising home prices. But foreign buyers still comprise about 10 percent of the U.S. housing market. Chinese buyers were the top international buyers of U.S. real estate in 2018 (purchasing at an average U.S. sales price of $752,000). International buyers from Canada ($383,000 average sales price in U.S. investments), and United Kingdom buyers (averaging $806,000) also comprised some of the highest concentration of buyers in U.S. real estate this year. To find out where international buyers are most likely to come from in your state, check out this state-by-state interactive map produced by the National Association of REALTORS®.
3. Vacation buyers and short-term rentals
More vacation home buyers are looking to monetize their purchases by renting out their rental properties using services like Airbnb or VRBO. They’ll buy a home to use for a few weeks out of the year and then rent it out on a short-term basis for the remainder. Twenty-five percent of those with vacation properties and 24 percent with investment properties rented their home as a short-term rental in 2017, with even more saying they planned to do so in 2018, according to NAR research. For those looking to buy with a goal of short-term rental in mind, be sure to do your homework, Erlenbush said. “A lot of cities are trying to limit short-term rentals so be sure to research what the politics or dynamics are in the city they’re buying in,” Erlenbush said. Read: Vacation-Home Markets That Offer High ROI
4. Luxury buyers
About 15.4 million households in North America have $1 million or more in financial assets, and they’re showing a big appetite for real estate. “There are more wealthy individuals than ever before,” which makes courting the luxury market a potentially lucrative move, Chorew said. Chorew and Erlenbush divided the luxury buyer into three main categories: the rich ($331,000 average incomes and with $1.8 million available to invest), the very rich ($492,000 average income and $2.8 million investable), and the uber rich ($881,900 average income and $18.7 million investable). Chorew and Erlenbush encouraged real estate pros to assess their markets based on these broad buyer categories. Also, it’s smart to target the move-up buyer who may be growing into these categories.
5. "Shopping-mall shoppers”
Sprawling shopping mall in many cities across the country are dying. Left behind will be expansive, empty parking lots, and large aging infrastructure—often in prime locations—that could increasingly catch the eyes of developers for mixed-use residential and retail developments. “The repurposing of old shopping malls is another opportunity for you if clients are looking for big projects, such as tear-downs, urban infill housing, and churches and nonprofits,” Chorew said. “Some of these malls are in prime locations and are perfect for infill housing,” Erlenbush added.