Blog assignment #8

Now, this blog post will finalize my blog updates since my semester here at Texas A&M is coming to a close. So it would make sense to take a look at how real estate in America will look in the years to come. During the last decade we have seen a huge increase in house prices and in a matter of months a decline just as big resulting in a complete freeze in the lending market. Now, real estate value is recovering to unprecedented levels - but where will this run take us?


I came upon this article, that tries to describe how the real estate market will look going out in the future. The main point is that the real estate market will be 'older, poorer and more diverse' but I will try to look in to the three drives of this change. The article is online and can be found here http://fortune.com/2014/09/17/american-real-estates-future-older-poorer-and-more-diverse/

1. The single most largest group in the population is 23 years old. This should be a good argument that the real estate will grow as these people are studying and hence are projected to take on a loan to afford housing. However, research shows that 3 out of 10 people with student loans default on their payments creating a trend where banks are more reluctant to give out loans. This might hurt the real estate market in the long run.
2. This group is more diverse than historically. So not only is the largest group of the population more indebted it also represents a demographic diversity that will put a damper on the real estate market going forward. Also, millennials are growing up in an age of increasing income inequality in which many members of the generation can expect stagnant wages. This, as well as the diversity of home buyers will hurt the real estate market.
3. The second biggest age group in America is 54 years old. This generation will impact the real estate market largely since they are in the economic prime of their lives. Their decisions on real estate and housing will largely impact how the real estate market will look like.

In real estate in general, we are already seeing an increase in age restricted residential housing to accommodate the expanding senior population. These people look for smaller and easy accessible housing and as this transition is occurring, their children look for suburban homes that can fit a whole family.


So, real estate will be older, poorer and more diverse to fit the changes in the underlying society. However, there's no way to be perfectly sure that these are going to be the changes that will occur. Real estate might even look like this in a century and two.


https://blog.lookout.com/wp-content/uploads/2011/09/the-jetsons.jpg


That's a wrap!