New economic data and real estate forecasts from the Washington Real Estate Forum highlight emerging opportunities for real estate investors. Those who pay attention to these real estate trends could position themselves in a place to make large profits while staying ahead of the curve.
The comprehensive NAR presentation at the DC economic and property forum this month paints a picture of a rebounding housing market, which will be moderated by a sluggish economy. The forecast is calling for extended, but tempered growth. However, those real estate investors that look deeper into the data should be able to pinpoint a variety of niches which are ripening. Those fast to position themselves have the potential to dominate emerging market segments before the majority of industry professionals even realize they are the next biggest trends, and capitalize on the niches providing maximum margins and velocity.
With job availability still disproportionately low compare to the current population, areas with the fastest growing business hubs and job markets are likely to provide the most appreciation and transaction volume in the short to mid-term. Hot states for jobs reportedly include CA, CO, FL, NV, ND, and TX. Note that this may change, and some of the top areas for jobs could be those where new construction takes off.
In fact, with housing inventory levels being held back by a multitude of factors, upward momentum relies on new construction to fuel the market with new inventory. While getting into the building side of real estate investing can bring more risks, and may not generally increase profit margins, new home prices are currently continuing to spike upwards and separate themselves from existing home sale prices. With the right strategy and marketing, there could be great real estate investing and brand building opportunities.
While much focus has been devoted to distressed properties and underwater properties in the last few years, NAR reports 30% of U.S. homeowners are free and clear of mortgage debt. This provides a huge market of potential sellers with a variety of potential motivations for selling at attractive discounts.
On the buy side, vacation home sales are reportedly one of the most consistent market segments which have being seeing volume steadily rise over the past few years. Specializing in this niche could not only offer a strong and growing market, but a great group of affluent clients to work with. Multifamily and single family rental homes continue to be a staple for cash flow real estate investing. The exit of large funds is helping to alleviate the competition, while their cash being pumped back in via investor loans is making it easier to grow portfolios. Both affordable rentals and properties with room for multigenerational housing a well-recognized niches by now, but certainly remain under served.
However, there is a huge market which will be increasingly neglected, yet be building pressure. The media continues to be intensely focused on pushing urbanization as a trend. Urban living might be hot, and U.S. aren’t likely to empty overnight. However, NAR suggests the largest segment of the market which is pent up is an overdue purchasing boom of single family homes. It will come. Those that differentiate themselves by serving this niche while others are focusing on micro apartments in the city could have a significant advantage. 40% of the population will soon be location independent and able to work remotely. Providing there is good internet, suburban housing, even bordering on rural, with more house being given for the money could be a great market for some investors to focus on.