As a property manager, your everyday responsibilities require so much of your attention that can be all-consuming. It’s not very often that you get an opportunity to take a break from your duties to shift your priority to the bigger picture that your business industry occupies.
However, right now is the perfect occasion for property managers to take a moment and ask, “How do the economy, technology, and demographics impact my job on a daily basis?” Perhaps more importantly, “How can I leverage what I know to stay in front of my competition?”
Homeowners want comfort in knowing that the value of their property is worth the amount of money they have paid for it as much as home buyers want to ensure they are getting their money’s worth.
It’s a great time of year for homeowners to question, “What might I need to do to ensure my property is holding or increasing in value?” Or as a home buyer, “What amenities are going to provide me more value for my investment?”
Investors should pause for a moment too, to determine, “How can I identify emerging markets that will have the greatest impact on my business?”
We understand that you don’t have the time to find out what all of the experts have to say about the 2018 real estate and property management market, so we’ve collected the research for you. Our research will help you – the property managers, homeowners and buyers, and the investors – prepare for the challenges you can expect to face as you’re planning your 2018 strategy.
Whether you’re a property manager trying to find the missing piece of the puzzle to keeping great tenants in your units and associations in the long term, a homeowner or buyer hoping to understand why properties gain and lose value from year to year, or an investor looking for up-and-coming markets to grow your business, you can discover the answers to these critical questions.
- How should property managers adjust their action plan to entice new contracts while keeping the current ones?
- Will property costs continue their sharp upward trend in 2018?
- Which Pittsburgh areas are expected to see the most growth?
2018 HOA Property Management & Industry Predictions
Scarcity of Affordable Housing
There’s currently a shortage of affordable homes for sale around the entire United States – including Pittsburgh and it’s surrounding areas. A scarcity of affordable housing causes overvaluation to occur. This means in a competitive market, consumers are willing to pay more to live in a home than the home might be worth.
This trend and the inflation that we’re seeing in home prices should not be compared to the housing bubble we experienced a decade ago though. The United States has taken many actions placing more conservative home buying and home lending processes now than what was in place a decade ago. Our new policies prevent consumers from paying extravagantly more than a house is worth. Thankfully, these same new rules also prevent buyers from paying more than they can reasonably afford.
Because the growth we’re seeing is more controlled, will see a slow and steady glide toward more reasonable rates rather than a crash.
Acri’s Housing, Costs, and Interest Predictions
- Affordable single-family homes around Pittsburgh will be hard, but not impossible, to find.
- In 2018, we expect to see the average home prices and rent in in the Pittsburgh and surrounding neighborhoods begin to level-off.
- This trend is expected across the country after recent years of rapid increase. The slowdown is part of our economy’s natural cycle. When home prices and rents reach as high a rate as they have in over the last 5-10 years, our economy attempts to compensate with price correction until the supply can catch up to the demand.
- Therefore, primary markets in the United States that have seen extreme price growth in recent years, will gradually glide back down to more sustainable long-term rates.
- We expect Pittsburgh and nearby communities to see rising interest rates in 2018. This increase in interest will be due to our homebuyers, businesses, and investors discovering the more affordable spaces in our city and suburbs.
Lack of Sufficient Construction Labor
Many migrant construction workers left the city and the country searching for employment during the last recession. Today, there is a different reason we do not expect to see their return. The newer US restricts and immigration policies are going to keep them from coming back.
To further add to this insufficiency is the fact that younger workers are not entering the construction industry as quickly as our older workers are leaving or retiring.
Nationwide, one in three construction jobs remains unfilled. Vacant construction jobs and positions ultimately slow homebuilding and drive up workers wages. Great for the workers but not so great for real estate and housing industries.
The increase in employee wages effects the developers’ profit margins directly. In order to make a profit, The developers counter-action to ensure a healthy profit is to build luxury properties. This action hinders the demand for affordable homes.
The construction shortage has been further amplified by recent natural disasters. Rebuilding efforts naturally follow natural disasters. Areas affected by the natural disasters demand to be rebuild. Rebuilding diverts labor and materials away from the building new homes in areas that have not been affected by natural disasters.
Acri’s Prediction Regarding Construction Labor
- Acri believes that in 2018, the housing market will continue to feel the impact of the shortage in the construction labor force. New construction production will be unable to meet the demand so existing homeowners will likely hold onto their homes rather than enter the market.
- Any affordable homes that become available will not remain on the market for long.
- A diversion of labor and materials away from Pittsburgh due to a natural disaster would strain the construction of new homes in our area, especially new single-family homes within new communities and new neighborhoods.
Hot Market Trends
The flurry of multi-family construction in 2015 and 2016 is resulting in new apartment vacancies across the country. With vacancy rates rising, rents are declining in comparison to the peak levels they reached in the past.
Green space and trail systems are now the top two desirable community features. Pets are now family members and for-sale communities are responding to homebuyer demands for dedicated spaces to care for the four-legged family members. Pet-focused amenities are hot. Dog parks are showing up in almost every community.
Homebuyers are searching for places they can be active. Trail systems and fitness areas for walking, running and biking. Neighborhood communities are catering to their residents offering neighborhood exclusive parks and trails. Resort-style pools are also highly sought after amenities for neighborhood outdoor enthusiast.
For association members who are attracted to gathering and socializing, main street village centers with retail services and cafes are popular.
Adding a new low-cost appliance to an existing amenity is a worthwhile long-term investment. It appeals to current homeowners. If you have an existing park or greenway, consider adding a picnic area, barbeque area or a firepit area.
When you divide your cost by its length of life for use, combine it with keeping existing residents in place because they’re happy and attracting new community members to your neighborhood, a new association amenity may prove most profitable.
Acri’s Market Predictions
- Home prices in primary markets have passed their peak. Property managers will no longer be able to compete on pricing alone without hurting their margins.
- Attention should be focused on attracting new resident purchases and keeping current residents satisfied. Consider adding a lower cost amenity or a new appliance to an existing amenity for a worthwhile long-term investment.
- Community property managers should consider which amenities and concessions they can offer to homeowners and association members to remain competitive in 2018.
Distinguishing Differences with Technology
Mobile devices have, and will continue to change the way we communicate and do business.
Smart thermostats and personal assistance are entering the homes of thousands of Pittsburgh residents as The Internet of Things evolves.
For property managers, leveraging these innovations and using these technologies to their advantage may be the key to attracting homeowners and retaining association membership in the coming years. Having an association website is no longer an afterthought but a critical piece of the pie. In fact, all homeowner associations in Florida with over 150 units are required by law to have a community website with a password protected members area where association documents are posted.
Acri’s Prediction Concerning Technology in the Industry
- In 2018, property managers can differentiate their business from their competition by taking advantage of the opportunities presented by technology.
- Buyers of all demographics want convenient ways to communicate with their property managers in person or online.
- Residents are looking for convenience in paying their dues, reporting maintenance issues, and more.
Changing Buyer Demographics
Millennials are entering the housing market. The problem is that they aren’t becoming homeowners at the same rate as previous generations. Student debt and tight credit standards likely contribute but the affordable housing shortage and the disparity between wage growth and rent growth are of even greater influence.
At the same time, many baby boomers are retiring, downsizing, and becoming renters. These circumstances result in a wide range of needs and expectations among all types of residents in the Pittsburgh area.
This broadening of demographics will continue to challenge property managers. Managers will need to adapt their management style as the disparity becomes even more prevalent in order to cater to all ages and abilities.
A neighborhood community might be home to a single young professional living with roommates, a family whose credit prevents them from becoming homeowners in luxury neighborhoods, as well as a retired couple who could no longer justify the cost in upkeep involved with owning their home and are buying a condominium instead.
Acri’s Demographics Prediction
- The diversity of buyers is staged to continually increase in 2018 and beyond.
- As the diversity becomes more prevalent, management styles will change.
- Successful property managers will have adjusted their approach – taking all ages and abilities into consideration.
2018 Strategy Recommendations Based on Acri’s Predictions
- Rental property managers will have a great opportunity in 2018 to expand their businesses and increase rental properties. The strong rental growth and rising rental vacancies will also positively impact investors seeking a greater return on their rental property investments.
- Community property managers will need to partner with builders who incorporate new technology and added creature comforts. Association Property managers should consider which software technologies they can leverage to entice new Boards to select their company to service the community.
- A smart strategy to attract and retain management contracts in 2018 should include digital capabilities like mobile communication, electronic association dues payments, online maintenance of ticketing systems, help-desks and similar technologies. In addition, property managers whose portfolios include upscale high rise buildings, especially those with a concierge desk should consider leveraging technologies like smart thermostats, locks, security systems, package delivery notification systems.
Listening to your membership, understanding their diverse needs, and adapting your services, and attracting new and retaining existing residents, has never been more critical to the success of your associations and business’.
At Acri, we understand property management because we are property managers. When you’re ready to take your properties and association to the next level, we’re here to help you. We’re prepared to supply you with relentless support by perfectly blending our personal attention, intuitive software, and expertise in the community property management industry.” ~Rinaldo Acri