Additionally, DellaPelle noted that the high office vacancy rate is also impacting local small businesses such as dry cleaners, as fewer people visit local businesses to take care of the needs created by working in the office.
Sustainability
More than previous generations, Millennials, many of whom are entering their prime home-buying years, are focused on sustainability and whether the property they invest in can withstand the effects of climate change, while keeping a low carbon footprint. This combined with an increase in extreme weather events and a changing regulatory landscape pushed sustainability to number 8 on the CRE list.
“Building owners continue to feel increasing pressure to better understand their carbon footprint, so they can try to decarbonize their buildings. The need for sustainable areas will continue,” said DellaPelle. “To make our structure stronger, the housing industry must embrace technology.”
Artificial intelligence
When you think about how the real estate industry must move forward in the future and embrace technology, the focus naturally goes to AI. While many in the real estate industry have lauded AI as a useful tool to help industry professionals improve the accuracy and speed with which they complete tasks, DellaPelle and CRE believe there are risks real estate professionals should be aware of when using the technology.
Many real estate professionals have begun to use AI to help them prepare comparative market analyzes in an area. While this may provide some time savings, DellaPelle noted that agents should always double-check the accuracy of AI-generated reports.
“If you look at the com data sheet, don’t trust it,” said DellaPelle. “Call whoever you need to make sure the information is accurate, as the AI may not have understood certain market forces or something as simple as location. Does the AI know that the location—which is a multi-family building in the city center with street retail—is close to high traffic and how that affects the price?”
Housing affordability
Housing affordability challenges are certainly not new and not surprising, especially in an area that has seen housing prices rise rapidly in recent years along with rising mortgage rates.
For DellaPelle, a major factor in this issue is the lack of housing inventory, which he and CRE say is due to demographic change.
“I will not sell my house as easily as before because, if you are my age (62) and you do not have children in the house, you do not have money for a house loan or what is left of that house money. it will be miniscule. Why would I sell my house and buy a new one, take out a 7% loan to get a small house that will end up costing me more than my big house?” DellaPelle put. “Inventory is decreasing because there are fewer people selling than before. In addition, we live longer, so we live longer in our homes because we are healthier.”
Additionally, DellaPelle said the buyer’s market has also slowed, as many potential new buyers are frustrated by the lack of affordable housing, and are instead opting for long-term rentals.
In his opinion, this means that there must be more programs and programs to help first-time buyers and access the housing market.
“We need to look at how to reduce the housing shortage through the development of opportunities for private companies,” said DellaPelle.
Insurance costs
In addition to the challenge of housing affordability, many homebuyers also face challenges related to rising insurance costs.
“It affects the price of your home,” DellaPelle said. “Insurance companies are only in business if they can make money, they only write policies if they are sure of the level of risk. If you own a property or help people become homeowners, you need to be very sensitive to this issue because it will be difficult to predict how much it will cost to protect the properties going forward.”
Geopolitics and regional wars
While it may seem challenging that a war in a far corner of the world could have an impact on your local housing market, DellaPelle said the idea is not as outlandish as you might think.
“All those conflicts affect us more today than before. “The world has obviously become more uncertain and vulnerable because of the state of the world and the way we are all connected,” said DellaPelle. “The world is getting smaller.”
As DellaPelle points out, a conflict in a different country can easily affect the supply chain, leading to an increase in the cost of certain goods, which can affect the level of consumers’ savings, hindering their ability to buy real estate. Additionally, historically many foreign investors have chosen to keep money in US real estate when conflicts have occurred in their countries, forcing US buyers to compete with real estate investors.
Maturity of the loan and charging of loan amounts
By the end of 2026, an estimated $2.5 trillion in mortgage debt is expected to grow. For many of these loans, this will mark a rapid change as they were written in a very different real estate market and where interest rates were very low.
“How does our economy go through that? What happens to real estate knowing that most of those loans are secured by properties that have a different set of price restrictions than they did when they were issued?” DellaPelle asked.
While this issue will have an impact on the commercial market, if it results in tighter lending standards across the country, it could make things even more difficult for buyers trying to get into the housing market.
Financing costs
By the same token, DellaPelle and CRE also don’t expect interest rates to cool down anytime soon. Although the The Federal Reserve cut interest rates by 75 basis points in the past few months, DellaPelle said the days of what he called “free money” are over.
“Whether the Fed cuts rates four times, or two or three out of five, rates don’t go to zero,” DellaPelle said. “I don’t think you’re going to see people borrowing less than 3% for a long time, unless something weird happens, and I don’t wish that on us.”
Despite this, DellaPelle believes that rate cuts are a good indication that monetary policy is beginning to normalize.
“It gives us hope that the fiscal policy is about to change, but it may take a few more years before it is successful,” he said.
International and US elections
Playing an important role in shaping future monetary policy is, of course, the election results. While many expected the election of Donald Trump as the 47-year-old Americanth president to usher in a new era of pro-business policies, DellaPelle emphasized that no one really knows how things will turn out.
“The policies, not only of our leadership in this country, but in other countries, are likely to change, especially in terms of things like monetary policy,” said DellaPelle. “The uncertainty associated with the many changes we have in politics is something you should consider. The decisions made by our elected leaders are very important to all of us and will affect the real estate industry. You must understand that the election, not only here, but in other places will have an impact that you cannot even expect right now.”
While these issues may seem daunting, DellaPelle told attendees the most important thing to consider is demographics.
“You have to wait for where they are [people] they are leaving. Like Wayne Gretzky, he used to say he wanted to go where the puck was going, not where it was,” he said.
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