Beware For These 3 Threats Facing Real Estate

Posted by Nikki Anca on October 30th, 2019

Despite both of those things being true, real estate is not as invulnerable as one may think. Your house for sale in Quezon might look good now, but that doesn’t mean factors can’t affect its value in the future. 

To be prepared for any potential risks and dangers your real estate endeavors might face, sellers, buyers, and agents must be aware of the looming threats facing real estate. Read on if you want to get up to speed.

Climate Change 

While it might not seem overtly obvious that climate change is a factor that can affect the value of real estate, you just have to analyze the potential effects of a worsening climate on physical structures. Flooding, extreme winds, and rising sea levels all have the potential to destroy houses and commercial spaces. Since information is becoming more accessible, people are starting to know which areas are vulnerable. 

The implication here is that real estate prices are lower when it comes to vulnerable areas while having properties in elevated areas that are safe from floods drives their prices up. Surrounding transportation, infrastructure, and community amenities also dictate the prices of given real estate. If your house for sale in Quezon City is in an elevated location with accessible amenities and a thriving local community, expect its value to keep rising. 

Political Instability and Global Uncertainty

Just like climate change, political instability and global uncertainty have an impact on decisions being made throughout the business community — real estate included. Whether it’s looming military conflicts or national trade wars, any sort of political instability will inadvertently and immediately affect the real estate market. With the visible civil conflicts in other countries, paying attention to this factor is getting more important.

One thing that is always affected by political instability is international investments. That is because trade and immigration policies are usually affected. This in-turn affects manufacturing supply chains, inflation, and interest rates. When these things go up, homeownership becomes more difficult. Mortgages become harder to pay off while the prices of general commodities also rise — making it hard for people to manage their finances. High-interest rates are also a barrier to investment when it comes to real estate.

Generational Behavior Discrepancies

When it comes to generational behavior, baby boomers have different spending patterns and preferences when compared to their millennial counterparts. For instance, Millenials have a more experience-oriented lifestyle while in their 20s instead of looking to settle down as the Boomers did during their 20s. Millennials also have a preference for living near the city instead of finding their homes in more suburban places. 

Meanwhile, Baby Boomers have been observed to shift to a more experience-oriented lifestyle in their 60s and are also keen to move closer to the city at a later age with a preference for more urban settings. The general trend is that Millennials behave like Boomers but only 10 years later, while the latter behaves like the former later in life.

Based on these observations, real estate developers, investors, builders, and owners will have to adapt. A one-size-fits-all approach to the design and development of housing units, whether for the purpose of renting or selling, will no longer be effective. In the coming years, baby boomers will be old-aged while millennials and younger generations will make-up most, if not all, of the housing market. Designs and developments must adapt, or risk losing a lot of value on failed projects.  

Key Takeaway

While there are more than just three threats to the future of real estate, the ones listed above are more apparent now not only due to the media but also due to observable behavioral patterns of people. If you are part of the real estate industry, adapting to new trends is key in surviving the coming changes.