The COVID-19 pandemic has caused a mass disruption to the way people live and work and prompted sweeping economic fallout felt throughout the world. Global leaders are still coming to grips with the long-term impact to the real estate industry.

COVID-19 has accelerated many existing trends, including digitalization, dispersed working, and online shopping, panelists said at a webinar on Wednesday highlighting the Urban Land Institute’s newly released “Emerging Trends in Real Estate Global Outlook 2021” report.

“The industry leaders canvassed for Global Emerging Trends are hopeful of a consumer-spending-led economic recovery feeding through an uptick in real estate business in the second half of 2021,” the report notes. “But much will depend on the rollout of the vaccine and an easing of lockdown restrictions.”

The Asia Pacific region appears to be leading the recovery globally compared with many Western economies, researchers note. That has prompted more global investors to increase their allocations of capital to the region. But the U.S. is also posting growth to many of its real estate sectors and seeing some evolve to better compete in the post-pandemic world.

Here are a few of the trends highlighted in ULI’s report that are on the radar for global real estate markets:

Real estate continues to attract capital. Low interest rates are fueling interest in real estate across the globe. “Most industry leaders interviewed for this report believe the inherent attraction of real estate income is even stronger this year than in pre-COVID times,” according to the ULI report. Favorable supply-demand dynamics have led investors to increase their allocation to residential markets, a trend that has only been accelerated by the COVID-19 outbreak, the report notes.

Unknowns loom for the office sector. The office sector, however, is more difficult for real estate leaders to predict. The rise of remote working, the increasing concern for the health and wellbeing of employees, and the lessening appeal of long commutes in big cities could negatively impact leasing activity this year and next year. Many large firms could delay corporate decisions on office space, or commit to a greater reliance on remote working. Many real estate leaders do predict employees will eventually return to the office, even if in more of a “hybrid” working model. One area of growth for the office sector: flexible space. (Read more: Co-Working Spaces May Soon See a Surge in Activity) “Industry leaders predict a polarization between perceived high-quality buildings—modern and adaptable—and outdated and inflexible secondary stock that is likely to suffer from a marked decline in demand,” the report notes.

ESG tops more agendas. The impact of carbon emissions from the built environment remains a pressing issue for more companies, and they’re placing a greater emphasis on environmental, social, and governance agendas. “Though decarbonization and climate change have been rising up the agenda for years, it is only in the past 18 months that these issues have moved to the foreground of the industry’s thinking,” the ULI report notes. “So far, the pressure is coming from the providers of finance and the biggest tenants. There is, though, the expectation that governments will ramp up regulation in the coming years.” More companies are showing a greater focus on putting into place strategies with decarbonization and realizing the consequences of carbon emissions from their buildings.

Re-imagined retail. The physical brick-and-mortar retail sector has faced the increasing threat of online competition—even more so since the pandemic. But investors are not shying away from seeking out new opportunities in retail, particularly as they view some falling prices in the sector. As such, retail could be acquired and repositioned either as more usable retail formats or re-envisioned as something completely different, such as residential or urban logistics.

The following is a chart of the top issues for real estate in 2021 for the United States, according to real estate leaders surveyed by ULI.

©National Association of REALTORS®
Reprinted with permission

Homeowners may notice an increase in their property tax bills. Municipalities levied about $323 billion in property taxes on single-family homes in 2020, a 5.4% increase compared to 2019, according to ATTOM Data Solutions’ newest property tax analysis for nearly 87 million single-family homes in the U.S.

The average tax on single-family homes nationwide in 2020 was $3,719—reflecting an effective tax rate of about 1.1%. But many areas of the country faced much higher rates.

“Homeowners across the United States in 2020 got hit with the largest average property tax hike in the last four years, a sign that the cost of running local governments and public school systems rose well past the rate of inflation,” says Todd Teta, chief product officer for ATTOM Data Solutions. “The increase was twice what it was in 2019. Fortunately for recent home buyers, they have mortgages with super-low interest rates that somewhat contain the cost of homeownership. But the latest tax numbers speak loud and clear about the continuing pressure on both recent and longtime homeowners to support the rising cost of public services.”

The states with the highest effective property tax rates in 2020, according to ATTOM Data Solutions’ analysis, are:

• New Jersey: 2.2%
• Illinois: 2.18%
• Texas: 2.15%
• Vermont: 1.97%
• Connecticut: 1.92%
• New Hampshire: 1.86%
• New York: 1.68%
• Pennsylvania: 1.64%
• Ohio: 1.62%
• Nebraska: 1.53%

On the other hand, the states with the lowest effective tax rates in 2020 were:

• Hawaii: 0.37%
• Alabama: 0.44%
• West Virginia: 0.51%
• Colorado: 0.54%
• Utah: 0.54%
• Tennessee: 0.59%
• Nevada: 0.6%
• Idaho: 0.61%
• Arizona: 0.62%
• Wyoming: 0.63%

Northeast metros tended to have the highest effective tax rates in the country, according to ATTOM Data Solution’s analysis. By metro level, the areas with the highest effective property taxes in 2020 were Syracuse, N.Y. (2.83%); Trenton, N.J. (2.69%); Binghamton, N.Y. (2.67%); El Paso, Texas (2.66%); and Rockford, Ill. (2.62%). Meanwhile, the lowest rates among metros in 2020 were in Honolulu, Hawaii (0.36%); Daphne-Fairhope, Ala. (0.37%); Montgomery, Ala. (0.38%); Tuscaloosa, Ala. (0.39%); and Colorado Springs, Colo. (0.42%).

By dollar amount at the state level, New Jersey had the highest average property tax on single-family homes at $9,196, followed by Connecticut at $7,395; New York at $6,628; New Hampshire at $6,596; and Massachusetts at $6,514.

On the other hand, the states with the lowest average property tax on single-family homes were Alabama at $841, followed by West Virginia at $849; Arkansas at $1,147; Tennessee at $1,202; and Mississippi at $1,241.

Competition is fierce among house hunters. For buyers in San Jose, Calif., San Francisco, and Raleigh, N.C., they should be ready to face the most competition in the nation, according to new research by LendingTree.

LendingTree ranked the 50 largest metro areas in the U.S. based on the competitiveness of their housing markets. They factored in the average down payment percentage, the share of home buyers who have credit scores above 720, and the share of home buyers who shop around for a mortgage before looking for a house. All of these categories—down payment, credit scores, and being mortgage ready—can help home buyers be in a stronger position to succeed in the heated housing market, too, the study notes.

For example, the average down payment percentage in the top 11 most competitive metros is 21%—showing that buyers are coming ready to make their offers stand out.

Beware: Your buyers could struggle to be approved for a home loan. As lenders tighten standards,  home loan approval is becoming more difficult, The Wall Street Journal reports.

The Mortgage Bankers Association reports that mortgage credit availability, which measures lenders’ willingness to approve mortgages, is at its lowest level since 2014.

“Because mortgage credit is more difficult to obtain, it is a more competitive environment overall,” Lawrence Yun, chief economist at the National Association of REALTORS®, told The Wall Street Journal.

Mortgage lenders are issuing more home loans at record levels. But those mortgages are most often going to those with stellar credit histories and borrowers willing to make large down payments. About 70% of mortgages granted in 2020 went to borrowers who had credit scores of at least 760. That is up from 61% in 2019, according to data from the Federal Reserve Bank of New York. Among borrowers with approved mortgages, the median credit score was 786 in the fourth quarter of 2020.

Lenders are being cautious in issuing loans as the housing market surges from strong homebuyer demand and higher home prices. Mortgage loan availability plunged about 35% annually in 2020. Lenders are being cautious as they look to protect themselves from making loans to borrowers who might lose their jobs amid the pandemic.

Forbearance is another fear of lenders. To receive approval for a mortgage, some borrowers are reportedly being asked to sign statements saying they have no intention of requesting forbearance after they are approved for a mortgage.

As The Wall Street Journal reports: “The meteoric growth of home prices has made some lenders reluctant to take on first-time home buyers or others they view as slightly risky. Lenders who were comfortable offering mortgages of $300,000 or $320,000 to borrowers with good-but-not-great credit histories might not be willing to lend the $350,000 or more now required to buy the same property.”

Mortgage lenders weigh multiple variables in approving applications, including the borrower’s employment history, income, credit score, and debt level.

Rejected mortgage applicants may find better luck soon, however. Credit requirements likely will loosen slightly this year as mortgage rates rise and prompt a decline in lenders’ bustling refinance business, Mike Fratantoni, the MBA’s chief economist, told The Wall Street Journal. “Since lenders aren’t being flooded with calls to refinance, more of their resources can be used to reach out to first-time buyers for purchases.”

To get more exposure for a $5.3 million Santa Monica, Calif., listing, real estate pro Rochelle Maize is turning to TikTok to create buzz for her soon-to-be-listed property. During the month of April, TikTok influencers can apply via an online form to spend two hours filming in the staged home. They’ll get access to several of the home’s “viral-worthy vignettes,” including its two-story pool slide, music room, recording studio, arts and crafts room, game room, and more.

In return for TikTok users using the home as a backdrop for their videos, they have to agree to tag the real estate pro and the seller to help get added exposure for the home as it hits the market later this market.

The TikTok influencers “get to film great content in locations they wouldn’t otherwise have access to, and we ask them to tag the house to get more exposure,” listing broker Maize of Nourmand & Associates told The New York Post. “We’re getting younger, different eyes on the property.”

The 6,600-square-foot, six-bedroom, nine-bathroom home, dubbed “TikTok West,” was first listed in October 2020 for $5.8 million. It will return to the market on April 9—with the help of TikTok users.

So far, The New York Post reported last week that the agent had received 15 applications from TikTok influencers. One TikTok influencer already has filmed in the house, capturing the home’s chandelier that hangs over a spiral maple staircase with a curved glass railing.

Across the Midwest, farmland prices are rapidly climbing, fueled by a recent rally in grain markets and low interest rates, The Wall Street Journal reports. Prices are rising even higher than the previous farm boom about a decade ago.

Farmland values increased during 2020 as higher grain prices buoyed revenue for farmers. Land prices in the region that covers parts of Illinois, Indiana, Iowa, Michigan, and Wisconsin saw a 6% increase last year, which marks the largest hike since 2012, according to the Federal Reserve Banks.

Prices for farmland are expected to continue to rise this year. A recent survey of Iowa farmland specialists conducted by the Iowa chapter of the REALTORS® Land Institute shows average farmland values were up nearly 8% since September.

Farmers eager to cash in are selling parcels of land, leading to an investor shopping spree. Large farmers dominate among owners of the nation’s 900 million acres of farmland. Seventy-five percent of cropland in the U.S. is controlled by about 13% of the nation’s farmers. Smaller farmers are finding it more difficult to afford a down payment on land parcels or compete for land leases, the Journal reports.

Indeed, competition is fierce as supply for farmland remains low. U.S. farmland has decreased by 25%—or 305 million acres—since 1950, according to USDA data. Investors are scooping up farmland: Pension and hedge fund companies view it as a lucrative alternative to stocks and bonds.

Pets have become trusted allies—and coworkers of sorts—to a growing number of remote workers during the pandemic. Now companies who are welcoming employees back to the office are realizing they may also need to invite workers’ furry friends. And that means building operators may need to ease restrictions to allow for more pet-friendly workspaces.

Fifty percent of C-suite executives say they are considering allowing employees to bring their pets to work when they return to the office, according to a survey from Canfield Pet Hospital and OnePoll. Fifty-nine percent of executives say they would allow “more flexibility” for employees to take care of their pets during the workday.

Such a policy may help entice more employees to return to the office after working from home for an extended period. Sixty-three percent of pet owners report anxiety over how their pets will cope with their post-pandemic work routine, according to a separate survey from Banfield Pet Hospital and OnePoll.

Executives also express an understanding and tolerance for pets, with 75% percent saying that being a pet owner has made them a better, more compassionate business leader. Other findings include:

• Among executives who are crafting a specific pet policy in the workplace, 59% say their plans were motivated by employee requests.
• Fifty-eight percent say they understand that staff members have gotten used to being around their pets all day.
• Forty-two percent say a pet perk at work would entice employees to return to the office.

Research also has shown that dogs at work can make employees more collaborative and less stressed, Inc.com reports. “We’ve seen the human-animal bond only get stronger during the pandemic, and it’s no surprise that owners are thinking about how they can best be there for their pets when they start to spend more time outside of home,” says Brian Garish, president of Banfield Pet Hospital. “We believe we can advance human health through pet health, elevating societal well-being.”

Executives who already had a pet-friendly workplace policy before the pandemic say it prompted an increase in employee socializing, encouraged more employees to come to work, effected an uptick in employee productivity, and made employees more willing to stay at work later. However, those suffering from pet allergies or who do not have a fondness for pets may not be as happy about pet-friendly policies at work.