We’ve reviewed forecasts and predictions about real estate and housing from the perspective of industry experts and professionals but what about real estate investors?
Knowing these investors are sharing the same industry environment of low mortgage rates, strong job markets, affordability problems and inventory shortages, what trends are investors expecting to see in 2020 that will help them grow their property values?
- Investors are hoping/seeing that homebuilders may just save everyone.
- After years of lack of inventory plaguing the market which resulted in spiking home values and preventing first-time buyers from entering the housing market, Daniel Lesniak, founder of Orange Line Living Brokerage, is hoping homebuilders may/will carry the economy.
- Lesniak said, “There was a long period in which new starts weren’t keeping up with the demand. Now, we’re seeing a bit of catch-up. We’re seeing more projects being acquired by builders.”
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- Millennials are taking the lead.
- According to Harvard University’s Joint Center for Housing Studies, Millennials, now in their mid-30’s to mid-40’s, are expected to increase their household formations by 2.9M over the next 10 years.
- Alex Pettee, a financial analyst and president of the real estate investment firm Hoya Capital, said, “The entry-level is where the incremental marginal demand will come from over the next decade ahead of the forthcoming Millennial housing boom, as the larges generation in American history comes full-force in the single-family markets across the country.”
- Building regulations and zoning are shifting.
- Cities are hoping to address affordability and inventory issues with various solutions…rent control in California, zoning changes in New York, Oregon, Minnesota, etc. and with new federal regulations for large developments.
- Investors would have like different solutions such as shifting regulations to open up new opportunities and to expand the types of housing that can be built.
- Investors are looking to more “unexpected” markets.
- Forget San Francisco and Seattle…look to Orlando, Phoenix, Charlotte, Charleston and most anywhere in Texas.
- All of these unexpected markets are projected to see big spikes in home values as more people move in pursuit of jobs and places to raise their families.
- Inzo Wizer, president of the Local Market Monitor, wrote for Forbes, “You can’t just invest blindly in these places – some still have high unemployment, some have just one big employer (such as a military base) whose fortunes you must weigh – but, in most cases, your economic risk is small even if very little growth is taking place.”
- Always remember to factor in technology.
- The saying goes, “Avoid tech at your own peril.”
- The continuing trend in real estate is to pull long-term data (from rent prices to demographics in specific neighborhoods and everything else in between) to inform decisions about what and where to invest and build.
- According to Pettee, “Housing is on of the last remaining industries looking at significant technological disruption, but we think that the effects are coming…that will streamline the home buying transaction.”
Thanks to InmanNews Veronika Bondarenko for source material and data.