Breathing New Life into the US Real Estate Industry
The US real estate sector finds itself at a crossroads. Recent news that foreign investors are poised to buy the dip in US property has highlighted the need for new approaches to existing issues in the industry.
The industry is at a crucial inflection point amid prolonged economic uncertainty. To address this, a new breed of entrepreneurs attempts to revitalize the US real estate sector. By lowering the barriers to entry, these innovators are not simply selling properties; they are attempting to change the future of real estate for the better.
US commercial real estate (CRE) has begun to emerge from a tumultuous period. Characterized by the domino effects of COVID-19, the office sector has been hit particularly hard by higher borrowing costs and widespread adoption of working-from-home practices. The CRE market plays a vital role in the US economy, supporting more than 7 million jobs and contributing almost $1 trillion to the US GDP.
Meanwhile, the housing market finds itself in a precarious position and its importance to the US economy cannot be understated. In April, the market’s share of US GDP surpassed 16% for the first time since 2022.
Additionally, according to analysis by Redfin, only 2.5% of US homes changed hands this year, the lowest in 30 years. They attributed this to rising prices and low supply, and politico-economic uncertainty given the upcoming US presidential election.
US housing affordability has become a growing concern because average 30-year mortgage rates remain high at 6.22%. According to Keith Gumbinger, Vice President of mortgage company HSH, several conditions must occur if we are to see a housing market recovery in 2025.
First, there must be a greater inventory of houses on the market. An increased number of homes would ease upward pressure on home prices. Second, mortgage rates need to cool off, which seems promising given the recent decline, but rates must not cool down too quickly as this would create a surge of demand that could ‘wipe away any inventory gains’ and cause house prices to increase again. Gumbinger acknowledged that it could be a while before we return to mortgage rates of around 4-5%.
Given these conditions set out by industry experts such as Mr Gumbinger and the unpredictable future of the housing market due to political uncertainty, it is clear the real estate sector needs to be revitalized through unconventional means.
One pioneer shaping the future of US real estate is Ben Miller, co-founder and CEO of Fundrise, an innovative investment company that enables everyday investors to invest in large real estate projects with small amounts of capital.
Not only does Fundrise democratize the real estate sector by giving novice investors access to the most privileged of enclaves, it also opens new avenues of funding for real estate developers which boosts underdeveloped areas that may have historically struggled to attract conventional funding.
Similarly, hope can be found in other relatively new sectors of US real estate such as media production. Amidst housing affordability concerns, networks such as American Dream TV (ADTV) are carrying the torch toward a bright future for real estate by empowering people to achieve their own personal American Dreams.
ADTV was established in 2014 by Craig Sewing, a media entrepreneur, TV personality, and radio host who found a need to counter negative media coverage about the housing sector. Craig noticed how mainstream media often portrays real estate in a bleak manner, especially at times of economic uncertainty.
To address this, his award-winning national network provides positive and inspiring stories from across the country, highlighting communities, local real estate experts, and lifestyle trends rather than focusing on market challenges. ADTV receives more than 20 million monthly views across household names such as Prime Video, CNBC, and Bloomberg to name a few.
More importantly, platforms such as this help consumers identify and connect with real estate professionals, lowering the barriers to entry into a traditionally impenetrable housing market at times of difficulty. Through greater awareness of properties on the market, one can expect greater stimulation of the sector, which can aid its recovery.
While it will take time to bring the national sector back to its former glory, new innovative ways of approaching the industry’s economic problems, like Fundrise and ADTV, provide much-needed assistance in reaching that goal.