Real Estate Predictions for 2013 from Industry Experts
- Nov 30, 2012
By Jessica Fiur, News Editor
Chicago—With 2012 coming to a close, experts are predicting how the real estate industry will fare in 2013.
The economy is recovering from the recession, which will lead to more housing starts. According to the Commerce Department, there has been the most new construction of homes in October 2012 since July 2008.
“Like other buildings, we’re seeing a few things that have allowed us some cautious optimism going forward,” says Jeff Benach, co-principal of Lexington Homes. “Due to signs of improvement in the market, we’ve been able to back off on incentives and discounting at most communities. Also, buyers are expecting as many promotions or deals as in the past few years. We opened four communities in 2012 and hope to open two or three more in 2013. We’re ready to be running on all cylinders again.”
Additionally, custom-home activity, which has slowed recently, will begin to see a pick up, and owners will look toward luxury finishes.
“Most of our homebuyers are in their 40s with young kids,” says Dimitri Nassis, CEO of Tandem Architecture and Construction. “This group is willing to take the plunge and isn’t going to settle. They want their dream home and are turning to customer builders to get it.”
However, while home sales are expected to gain more traction, industry insiders still believe that the multifamily industry will remain strong.
“Renting is a trend that is here to stay,” Randy Fifield, vice chairman of Fifield Companies, tells MHN.
T.J. Rubin, managing broker of Fulton Grace Realty, echoes this sentiment.
“There’s still a level of skepticism among many people who, on paper, are excellent candidates to buy,” he says. “Those who normally would be buying are willing to spend $2,000 to $3,000 a month to get a great rental, which is putting luxury rental units in very high demand. Luckily, there are a lot of high-end condos available to rent, as owners are holding onto them and renting them out instead of selling at a loss.”
Renting will continue to appeal to Gen Y, but the other generations, who traditionally were homeowners, will turn more toward multifamily options.
“Empty nesters, baby boomers and even people looking for a pied-a-terre or second home are renting,” Fifield says. “People want flexibility today, and they do not want to break the bank in order to live, work and play. Condos require a mortgage, taxes, assessments and a long-term commitment. Renting is simply less risk with more rewards. While apartments are getting smaller, apartment amenities and the quality of the finishes are getting better.”
With that flexibility comes the ability to live alone. Developers are taking note of this desire, and with that, apartment sizes will skew smaller than in previous years.
“Renters’ preferences have changed over the years regarding the size of their home,” Fifield says. “Going forward, renters will continue to prefer smaller, sophisticated residences if they know that means they’ll have fabulous building amenities, like outdoor pool decks and multiple entertainment rooms.”
Industry experts are also predicting that design will be an important element in the upcoming year. The popularity of design websites such as Pinterest and Houzz, show no signs of waning.
And, while homeownership will start to appeal to more people than in the past several years, renting will remain ideal for those still afraid of the obligation that homeownership entails.
“[Renting] is a way of life that people truly enjoy,” Fifield says. “You can rent dresses from Rent the Runway, cars by the hour with Zipcar and buy disposable cell phones. These services allow every person options and flexibility without making a commitment.”