The Future of Housing Demand: Insights from Real Estate Experts
Nobody has a crystal ball when it comes to predicting the future of the housing market. However, what we do have is the collective wisdom of a consortium of seasoned real estate agents. These agents, with boots on the ground and no agenda other than serving their clients, offer an invaluable perspective based on decades of experience. Here are their thoughts on how recent events and market trends might shape the housing market in the near future—and beyond.
The housing market is resilient, but navigating its complexities requires a combination of expertise, adaptability, and preparation. Here’s what we anticipate:
• For Buyers and Renters: Expect fierce competition. Furnished rentals will be in high demand as families seek temporary housing, and home buyers will face a market defined by scarcity and rising prices.
• For Homeowners: Rising property values present opportunities for those looking to sell. However, rebuilding will be a significant undertaking, requiring patience and careful planning.
• For Investors and Developers: The influx of buildable lots offers opportunities, but the challenge will be balancing profitability with community preservation.
Rising Demand for Homes
The demand for homes, both for purchase and rent, is expected to soar in the coming months. Furnished rentals, in particular, are becoming a hot commodity as displaced homeowners and renters seek turnkey solutions that provide immediate comfort.
Recent natural disasters have intensified this trend, displacing thousands of households and exacerbating an already supply-constrained market. In LA County alone, over 9,000 homes have been lost to fires. By the time the full scope of the damage is realized, this figure could rise to as many as 20,000–30,000 homes, taking into account destroyed infrastructure, smoke damage, and toxic ash contamination.
This surge in displacement exacerbates an already tight housing market. With only 13,000 homes sold in Los Angeles last year, the addition of thousands of displaced buyers and renters will unleash significant strain. The ripple effects will be felt not only in home sales but also in the rental market, where competition is already fierce.
A Supply-Constrained Market Equals Rising Prices
The equation is simple but striking: high demand paired with low supply equals rising prices. While past disasters, such as the 1994 Northridge earthquake, initially caused property values to dip, today’s market is different. Unlike 1994, when inventory was abundant, the current market operates with historic lows in available housing stock. Even with the uncertainty brought on by events like COVID-19 and 9/11, the housing shortage will continue to push prices higher.
Moreover, insurance payouts are expected to inject cash into the market, creating a wave of buyers with funds to compete aggressively. However, this influx will not address the deeper issues of inventory shortages and rising costs, leaving the market under immense pressure.
The Insurance Predicament
One of the biggest challenges facing homeowners and buyers alike is the state of homeowner’s insurance. Premiums are expected to rise significantly, with some areas potentially becoming uninsurable. Insurance companies are grappling with enormous losses, and existing homeowners are already experiencing policy cancellations, inflated premiums, and limited options. For buyers, securing insurance in high-risk areas will add yet another layer of complexity to an already difficult process.
Adding to this, many homeowners may find themselves with cash settlements that exceed their home’s market value but fall short of covering the cost to rebuild. While this provides them with the funds to buy another home, it often dissuades them from rebuilding, as the process is both time-consuming and expensive. This is especially true in regions like Altadena, where limited oversight and unincorporated status may encourage developers to construct luxury properties instead of rebuilding for displaced families.
The Long Road to Rebuilding
Rebuilding homes lost to disasters is a monumental task—and one that many homeowners may not take on themselves. For those who do, the road ahead is fraught with delays. Home building is one of the most regulated industries in the country, and in California, departments like the LA Department of Building and Safety often take years to approve plans. Challenges with utilities, such as obtaining gas meters from SoCal Gas, add even more obstacles.
Developers, rather than individual homeowners, are expected to dominate the rebuilding process. The influx of buildable lots will likely result in high-end developments, like $3 million modern barns, further reshaping communities. Areas like Altadena, where there’s no design review process, could see rapid changes in architectural trends and community character. This raises concerns about the preservation of local culture and history.
A New Landscape for Communities
The transformation of affected communities is inevitable. Displaced homeowners often sell their land to developers, who prioritize profitability over affordability. While this trend brings revitalization opportunities, it also risks pricing out longtime residents and altering the essence of neighborhoods.
As new construction projects emerge, the focus on luxury developments could exacerbate housing inequities. Without careful planning and advocacy, communities could lose their unique identities to high-margin builds that cater only to affluent buyers.
If you’re navigating this rapidly changing market—whether as a buyer, seller, or investor—it’s crucial to work with a trusted real estate advisor. With so much at stake, expert guidance can help you make informed decisions and seize opportunities in an evolving landscape.
The future is uncertain, but one thing is clear: the housing market is entering a period of significant transformation.
