The Original Realty Magazine
The residential real estate market in the US has continued to stay much stronger than expected. Though there are a variety of factors at play, which may influence opportunities through the rest of the year. Here’s what to watch over the next couple of quarters…
Atlantic Hurricane season is here, and runs through November. Experts are calling for an average year with potentially more named storms that can deliver damage, but may not develop into full force hurricanes. Note investors, flippers, and landlords should all remain on alert and ensure their assets are insured and plans are in place to protect and recover from these storms.
While capital markets still seem flush, mortgage lending may continue to tighten. Those with capital have been oversubscribing to fund investment opportunities. While banks and other conduits have been pushing easier credit through alternative mediums, like personal loans and lines of credit. Still, government agencies have announced they are pulling back on easy credit in 2019, as they seek to stem defaulting notes, reduce exposure to high LTV loans, and manipulate the market by reducing demand, which has been pushing up asset values.
This may be more noticeable in some areas like NYC, where new rent regulations are scaring international investors, and could lead to commercial mortgage defaults if developers and landlords cannot refinance on maturity.
High Level Market Intervention
HUD Secretary Ben Carson recently spoke out in DC, suggesting more rezoning and expanded regulations to allow for more tiny homes and manufactured homes to help increase inventory and alleviate the affordable housing crisis.
Big Landlords Go Bigger
Multifamily apartment investing is still being viewed as one of the safest and most reliable moves by all types of investors. Big funds have dropped billions of dollars on expanding income property portfolios this year. Now they are joined by the largest global tech companies like Microsoft, Google and Facebook, who are increasingly investing hundreds of millions of dollars in workforce housing. It offers them a great way to hedge their bets on their on stock and growth, with potential tax breaks, and new income sources should the economy flinch.
At the same time these moves may be taking even more stock out of the housing pool, forcing more to rent, or at least hiking up the prices of remaining homes for those who want to buy and stop paying rent.
The Effects of New Technology
New technologies have been helping real estate investors become far more efficient and profitable. Yet, rapidly emerging technologies are also ripe for disrupting the workforce and lifestyles. Around 80% of existing jobs can already be replaced by robots and machines. While that may not happen overnight, it is happening. There are already autonomous delivery robots and coffee shop baristas. For businesses to stay competitive, they will have to continue to keep up with their competitors in efficiency. This not only means a substantial decline in physical office and retail jobs, but potentially changing the neighborhoods which are most attractive to residents. Why live in Manhattan and pay the extreme prices, if most of the big fashion retailers and employers are leaving? Particularly, if you can make the same money while paying a fraction of that in housing elsewhere. At the same time, this could open up big opportunities for converting these commercial buildings to housing to alleviate inventory issues.
How are you staying ahead of these emerging factors?
Find out more about investing in secured debt and real estate, go to NNG Capital Fund