The Counselors of Real Estate have identified the most impactful issues ahead for the industry
Inadequate infrastructure and affordability of housing are the two issues that will have the most significant impact on real estate in the next year.
The Counselors of Real Estate says these two factors lead the top 10 issues it has identified for 2019-2020. The list was released recently at the NAR annual conference in Austin, TX.
“Inadequate infrastructure creates a hard ceiling to economic development, and real estate values are tied to sustainable growth,” said Julie Melander, CRE, 2019 chair of The Counselors of Real Estate. “The U.S. must invest in infrastructure to compete globally, but right now it is lagging other nations on infrastructure investment.”
The report warns of rising frequencies of failing roads, bridges, tunnels, railways, airports, the power grid, water systems, and levees.
The main housing issue cited in the report is the growing gap between expensive housing supply and the ability of potential buyers to afford to buy.
“Housing affordability is threatening the stability of the middle class, which will hit other parts of the economy as well,” said Melander. “Additionally, the new limits on the deductibility of state and local taxes are affecting both urban and suburban homeowners, while the liquidity of the housing market has been compromised by the difficulty of the Baby Boomer generation in finding buyers for the homes that represent a major portion of their net worth.”
The report says that issues exist on both the supply and demand sides of the equation.
Climate change
The third biggest issue identified by the report are environmental threats.
“Weather and climate-related risk has emerged as a new—and likely permanent—aspect of fiduciary duty and what it means to assess, disclose, and manage these risks for real estate investments,” said Melander. “Real estate investors can no longer rely on historic performance to predict future returns.” With the frequency and intensity of events increasing, the report states that weather and climate-related events present physical and operational risks for real property.
Completing the top 10 issues are the technology effect, end-of-cycle economics, political division, capital market risk, population migration, volatility and confidence, and public and private indebtedness, respectively.
“Many of these issues are interrelated and thus influence one another,” said Melander. “Clients of Counselors seek unbiased, objective advice on the critical factors that will impact all property sectors today, as well as those issues that may affect their decisions over the next ten years. This thought leadership initiative is an invaluable service to those clients and to the real estate industry in general.”
