T
he real estate industry is bracing for a potentially tumultuous 2025, according to the Counselors of Real Estate's (CRE) annual Top Ten Issues Affecting Real Estate report. The report, presented by CRE's global chair Anthony DellaPelle at the National Association of Realtors' NXT conference in Boston, highlights key challenges that could impact the market.

    The top issues include a price expectations gap between buyers and sellers, office vacancies, sustainability concerns, artificial intelligence risks, housing attainability, insurance costs, geopolitics, loan maturities, debt repricing, and global elections. DellaPelle emphasized that these issues are interconnected and can have far-reaching consequences for the industry.

    The price expectations gap is a significant concern, with buyers and sellers holding strong positions on asset prices. This standoff could lead to a decrease in demand and a subsequent drop in home prices. Office vacancies, meanwhile, can have a ripple effect on local businesses and property values, as well as impact tax revenue for municipalities.

    Sustainability is also a growing concern, particularly among Millennials who are prioritizing eco-friendly properties. The increasing demand for sustainable properties will require the industry to adopt new technologies and strategies. Artificial intelligence, while promising, poses risks if not used accurately, and real estate professionals must be cautious when relying on AI-generated reports.

    Housing affordability remains a pressing issue, driven by a lack of inventory and changing demographics. As older homeowners stay in their homes longer, there is less supply available for younger buyers. Insurance costs are also rising, affecting home prices and making it harder for consumers to purchase real estate.

    Geopolitics and regional wars can impact the global economy and housing markets, as seen with conflicts in distant countries affecting supply chains and consumer spending power. The upcoming loan maturities of $2.5 trillion in commercial debt will require careful management, potentially leading to stricter lending standards and higher interest rates.

    DellaPelle emphasized that understanding population demographics is crucial for navigating these challenges. As the world becomes increasingly interconnected, real estate professionals must anticipate changes in consumer behavior and adapt to a rapidly shifting market landscape.