3 Factors That Will Impact the Future of Housing

There aren’t that many businesses that are as dynamic as the world of housing. New trends are introduced every day. Developers are always finding new ways to innovate and go into new markets. Real estate investors also have to stay abreast of these new changes and understand how new generations of home buyers have different needs and expectations. In addition, societal factors and demographic shifts are having a profound effect on the sector, and on housing prices and trends. Let’s take a look at a few factors that will impact the future of housing.

Growth of Income Inequality

Income inequality is something we hear about a lot, and it has a direct impact on housing markets as well. But the 1 percent has little effect on the markets as a whole. What makes a real difference is the shift in fortune among the low, middle, and high skilled worker population.

While there is a growing demand for low skilled and high skilled workers, a lot of the jobs for medium skill workers have been eliminated. There is also an increasing gap between the wages of highly skilled workers with a college education and those without. This ultimately means a thinning of the middle class, and middle-income housing as well.

Limited Buildable Space

Another trend that is having a huge effect on the housing market is the shrinking pool of buildable land assets. While there is still a lot of undeveloped land in the United States, not enough of it is near employment and population centers.

This is one of the reasons for the recent tiny house trend. We are also starting to hear more about container shipping homes as well. While they are still in their infancy, we can see container homes used in many more applications in the future and they are becoming increasingly sophisticated. If you want to learn more about container homes, here’s an amazing online resource.

Container homes can be extremely versatile, and the fact that they were made from shipping containers means that they can be shipped or transported in certain cases. These could not only solve land limitation issues but change the whole idea of what a mobile home can be.

Higher Percentage of Development Cost Spent on Land

Limited buildable space also means that land prices are rising and taking up a larger percentage of development costs. This can be felt in centers like San Francisco, where there’s virtually no more space left to be developed.

San Francisco’s geography, with its surrounding three bodies of water, is largely to blame there. But even in cities that are more favorably located, development projects are still usually away from the major centers, which increases commuting costs, as well as health care, shopping, etc.

Construction costs, on the other hand, have decreased significantly over the same period, and this isn’t the first time this happened. We saw the prices of housing double during the mid-2000 housing bubble, while construction costs only increased by around 12%. Many of the market conditions during that time are similar to those we have now as far as buildable land is concerned, so we can expect the same pattern to repeat itself over the next few years. This means we can expect more developers to try to maximize space by focusing more on multi-unit properties in high demand areas.

Conclusion

These are just a few of the biggest factors that will affect the housing and construction market in the near future. If you’re an investor, buyer, or developer, we strongly suggest that you look into those in detail and consider them when making decisions.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.