Bernice Ross

The tax bill has passed, home prices are up, the stock market keeps hitting all-time highs and consumer confidence has soared. On the other hand, we’ve been rattled by a year of unprecedented natural disasters, growing divisiveness and an ongoing inventory shortage. What will happen in 2018? Look for things to shake, rattle and roll!

Shaken and Rattled

Undoubtedly the biggest shakeup in 2018 will result from the Tax Cuts and Reform Bill. States are already experiencing a loss of high income residents. The SALT provisions in this bill (the limitation of $10,000 in deductions for property tax or income tax) will result in increased numbers of taxpayers heading to states with lower tax burdens. This in turn may result in price declines and lowered state revenues.

Complicating the issue, states like California that based their tax collection system on the federal 1040 form will be scurrying to create a different system that will not reduce their revenues even further. Any revenue declines will rattle state governments and could result in more taxes and/or fewer services.

The unprecedented natural disasters in 2017 have led to some major demographic shifts as well. More than 130,000 Puerto Ricans have already arrived in Florida and that number may swell to 300,000, the Tampa Bay Times reported. If this group tilts Democratic, Florida may shift from red to blue, possibly shaking up the 2018 midterm elections and most certainly the presidential election in 2020.

The California Association of Realtors (CAR) discovered in early 2017 that only 14 of the top 100 brokerages in California were run by women. CAR set about remedying this situation by launching its Women’s Initiative, which included a day-long WomanUP! conference last June. Look for this initiative to become a major force in the industry during 2018 as CAR releases the white paper on its research, launches a national mentoring initiative and holds more WomanUP! events across the country.

A new term has been coined to describe a suburban area with an urban feel – author John Burns calls these areas “surban,”  with walkability to great retail from a house or apartment. Unlike McMansions, which receive 12 percent to 45 percent fewer views and take 73 percent longer to sell, surban properties will garner premium prices as Millennials seek the benefits of an urban lifestyle married with a new need to access family housing and good schools.

Unlike Millennials who graduated from college prior to 2012, recent college grads are finding jobs right out of college. This trend will continue in 2018 as the economy roars and unemployment continues to drop. As a result, younger Millennials will pay off their student loans and put aside money for a down payment much more quickly. In 2018, look for older Millennials to lag behind as “Gen Rent,” while the younger Millennials and Gen Z transform into “Gen Buy.”

Polarizing and Lucrative

Both sides of the aisle are eager to move forward on repairing the country’s infrastructure. Look for these massive spending projects to continue to fuel the hot economy. But due to last year’s fires and hurricanes, we’re already seeing shortages of construction workers and materials. These shortages will become even more pronounced in 2018, driving the prices of new housing even higher. Also, don’t be surprised to see an expansion of the guest worker program to accommodate the increased demand for construction workers.

The Dodd-Frank Act dramatically increased the cost of compliance for mortgages, forcing many credit unions and local banks out of business. President Donald Trump wants to eliminate Dodd-Frank’s onerous credit requirements; look for Congress to back him up, creating a new heyday for credit unions and local lenders.

Brokerages, MLSs, tech companies – everyone seems to be consolidating while boutique brokerages and agent teams flourish. The real estate market is polarizing: big brokerages versus boutique brokers and agent teams; do-it-your-selfers and “iBuyers” versus high-touch, high-value brokerages; big tech players versus “new kid” startups. Look for this trend to continue in 2018, with mid-sized players struggling to gain and retain market share.

This year will also see top producers and other early adopters embrace predictive analytics and AI tools. Some examples include lifestyle search with over 100 different factors, next gen CMA tools and chatbot technologies that instantly convert online leads into appointments. Those who marry these tools with high-touch and concierge-level client services will dominate their markets.

2018 promises to be a strong year economically and may very well be one of the best years ever to be in the real estate brokerage business.

Bernice Ross, CEO of RealEstateCoach.com, is a
national speaker, trainer and author. She may be reached at Bernice@RealEstateCoach.com.