Times – and homes – are changing: Emerging Trends in Real Estate®: US and Canada
It’s no surprise that COVID-19 changed everything—literally everything—about life as we know it in the short term. What might be surprising is how the pandemic will affect life going forward, from how we do business to how we interact with friends, to, yes, how—and even where—we buy and sell real estate.
For some insight, we pored over “Emerging Trends in Real Estate® 2021,” a yearly publication undertaken jointly by PwC and the Urban Land Institute. Each year, this report is widely circulated and highly respected for its detailed, data-driven predictions. In 2021, however, they had their work cut out for them. After an unprecedented 2020, how can anyone begin to predict what real estate will look like as the world recovers?
According to the report, “More so than any other catastrophe or world war, the novel coronavirus affected and continues to affect virtually every person in every country in the world.”
It’s hard to comprehend, really. Only four other events in the past century—the Spanish flu pandemic of 1918–1920, World War I, the Great Depression, and World War II—had similar societal, economic and political effects.
As we begin to emerge from the crisis of the pandemic, the ripples of these effects will be felt for years to come. The report points out, however, that while COVID-19 was the impetus for change in the real estate industry, many of these changes were already in the pipeline. The advent of the virus simply accelerated their arrival.
“Now, more than ever, the real estate industry has the chance to take the lead in using planning and development skills and investment capital to reshape our work and lifestyle environments. These tools can be used to address societal issues of safety, green space and racial equity. The gauntlet of responsibility is ours to embrace, and industry leaders see the opportunities and are responding with investment and leadership,” said Byron Carlock, PwC Partner and US Real Estate Practice Leader.
As Carlock points out, it makes sense that our homes and workplaces will evolve to reflect our values as a society.
So what’s changing?
1) Where we live
With the onset of the pandemic, people sought out space. It was more difficult to effectively social distance within the crowded confines of a large city. Combine that with massive shutdowns of public transit, theater and entertainment, and many city dwellers left their urban nests in favor of family homes or second homes in the suburbs.
This exodus went in stark contrast to the previous decades of population growth larger cities had enjoyed. Survey respondents to the Emerging Trends report don’t feel this is a permanent shift, however. Almost all of the more than 1,600 leading real estate industry experts were confident that cities, especially gateway markets like Boston, Los Angeles, New York City, San Francisco, and Washington will regain their appeal sooner rather than later. City life will bounce back as the world opens back up and people reacclimate to spending time in office spaces, theaters, restaurants and other venues that make cities so attractive.
2) How we live. And how we work.
Pre-pandemic, most people lived at home and worked at the office. COVID-19 smashed that norm as work and home life merged. And now, as we cautiously contemplate returning to the office, many workers—and their companies—are examining how to make remote work their normal.
With proximity to the office becoming less important, home buyers are seeking out homes in more remote locations. They’re also prioritizing houses with plenty of potentially quiet space available where parents can work and kids can attend virtual school. Finally, to make this lifestyle work, the tech has to be available. With internet connectivity being the lifeline for careers and learning, quality Wi-fi is no longer a luxury.
3) How we stay healthy.
If there is one thing COVID-19 taught us, it was the importance of keeping our hands to ourselves. And washing them. And then washing them again. This new focus on avoiding other people’s germs is a huge part of the health and safety trend in both commercial and residential real estate.
While sustainable, healthy living was a growing trend pre-pandemic, it’s the driving force behind increased smart-home technology. Many home buyers are looking for homes they can talk to, Alexa-like, in addition to touchless controls and motion sensors.
We also want to bring the outside in. Outdoor spaces remained a safe way for people to interact at the pandemic’s peak, reminding us of our need for airy, open spaces. According to the Emerging Trends report, “… seamless transitions into outdoor space, fresh air, open spaces, and oversized windows to bring in natural light are all in high demand.”
Buyers are also seeking out homes with potential for multigenerational use, be it an aging parent or returning adult child. And it’s not just an extra room buyers are seeking; they’re in search of houses with additional living quarters, including private entrances. After so many people experienced the isolation and loneliness of COVID-19 quarantine, it’s no surprise that living with those we love has taken on a renewed sense of importance.
These trends probably just scratch the surface of shifts we’ll see as the world emerges from pandemic lockdown. Despite the massive upheaval caused by COVID-19, we like to think these changes represent a bright side of a dark time.
For more of the Emerging Trends in Real Estate® 2021 report, read the summary or access the full report.