Pros Say These Are Real Estate’s Biggest Threats

July 1, 2019

The Counselors of Real Estate identified emerging issues that are expected to have great impact on the housing market—as well as your business and transactions—in the future.

The number one concern weighing on the real estate industry this year: infrastructure, according to CRE’s survey of its 1,100 members. “Inadequate infrastructure creates a hard ceiling to economic development, and real estate values are tied to sustainable growth,” says Julie Melander, 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 notes that many in the industry want to see greater maintenance of roads, bridges, tunnels, railways, airports, the power grid, water systems, and levees. Lawmakers are considering a $2 trillion economic package to update the nation’s infrastructure.

The number two concern on CRE’s list of most pressing real estate issues: affordability and the widening gap between home prices and the number of people who can afford them. “Housing affordability is threatening the stability of the middle class, which will hit other parts of the economy as well,” Melander says. “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 number three concern on CRE’s list: weather and climate-related risks. “Weather and climate-related risk have 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,” Melander says. “Real estate investors can no longer rely on historic performance to predict future returns.”

The CRE’s full top 10 list of issues most affecting the real estate market in 2019 are:

  1. Infrastructure
  2. Affordability
  3. Weather and climate-related risks
  4. The technology effect
  5. End-of-cycle economics
  6. Political division
  7. Capital market risk
  8. Population migration
  9. Volatility and confidence
  10. Public and private indebtedness