Well, hello … 2020!
It’s a new year and a new decade … and it’s a TERRIFIC time to talk about the top trends in real estate investing.
Many factors are affecting the path real estate is heading down this year … demographics, economics, technology, politics, energy, and interest rates.
So sit back and take note … these are the top trends in real estate in 2020.
In this episode of The Real Estate Guys™ show, hear from:
- Your trending host, Robert Helms
- His trendy co-host, Russell Gray
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Trends in single family homes
Today we’re going to focus on some of the top trends that experts are predicting for 2020 in real estate.
Real estate markets are diverse and always changing. On the demand side, the way that people interact and use real estate is essentially the same … but nuances change and create opportunities for investors.
On the supply side … we have whatever we have built at this moment and the plans that developers and builders have to put more inventory into the ground.
When it comes to real estate, you’re always looking at supply and demand and the flow of people and money.
Let’s start with Realtor.com and its housing market predictions for 2020. Remember that these predictions have to do with single family homes.
The National Association of Realtors is calling a 4.8 percent growth in home prices and a 1.8 percent decrease in existing home sales.
That’s a modest growth in price and less sales for a variety of reasons.
If we stopped right there, you might say that it doesn’t sound like a great real estate market to be in … BUT we’re not stopping there.
To us, these predictions mean that most of the opportunities are going to come in niches .. and we’ll dive into that later.
But keeping with the big picture, nobody is predicting a huge rise in interest rates … they’ll probably stay consistent. And overall, mortgage rates will remain low.
That’s good for a couple of reasons.
Obviously, to acquire property with leverage, you’d like to see a low interest rate. And if you already have a property with higher interest rates, your properties have better profiles today.
The National Association of Realtors (NAR) also ranks markets that they see as having a potential increase in growth … both in sales and in price.
The number one market that they chose only has 0.3 percent growth in sales projected … but 8.1 percent projected in price growth.
That market is Boise, Idaho.
Other markets that made the top 10 include Tucson, Arizona; Columbia, South Carolina; Colorado Springs, Colorado; and Memphis, Tennessee.
Along with growing markets, the NAR predicts which markets will decline in both sales prices and number of sales.
Those markets include Chicago, Dallas, Las Vegas, Miami, and San Francisco.
The NAR said that the offset of the decrease in demand in some areas is that there will be new housing starts.
In fact, according to Fannie Mae’s economic and strategic research group, new home starts will jump from a 1 percent increase in 2019 to nearly 10 percent in 2020.
Niches that make sense
One trend that we have been talking about for some time is senior housing.
The demographics are undeniable … look at how powerful the baby boomer generation is moving through all phases of their economic life … and now they’re entering their senior season.
Anything related to seniors is going to probably be pretty solid for the next couple of decades.
You hit a season of life where you need some special assistance and accommodations.
There are lots of places to play … from the 55 and older communities to assisted living and residential assisted living to skilled nursing and memory care facilities.
There is demand here that will be exceeding supply … and you don’t have to be a rocket scientist to recognize the signs.
The next niche has some overlap when it comes to seniors … and that’s multifamily.
Multifamily has been huge in terms of demand for many years, and that’s been both good and bad … the bad part is that we’ve had a lot of money chasing a particular set of increasing assets.
There has been a demand for multifamily on the tenant side and on the investor side … and on the investor side, the demand has meant a decrease in return.
For 2020, we anticipate growth to be in the niches within multifamily .. like 55 and over apartment campuses or millennials looking for micro apartments.
Micro apartments are small apartments that cater to younger tenants … usually fairly affordable … in city centers with unique amenities like shared workspaces.
Another great trend … and one of our favorite niches … is resort property.
This is a wide niche … but we tend to like the higher end as opposed to spring break on the cheap.
It’s hard to go out and buy a 400 room hotel … but there are other ways that people are investing in resort properties.
Some will allow you to own an individual unit that operates as part of a big resort or a hotel. There’s also the segment of vacation rentals in condos or single family homes.
Not your cup of tea? Maybe take a look at agriculture instead.
There are so many opportunities to come alongside successful operators in this space and invest offshore.
The great thing about agriculture is that the underlying industry is probably not going anywhere … every human and animal needs to eat.
The population is growing … and we are going to need more food.
Take care with trends
Looking for real estate investment trends can reveal great opportunities.
The only caveat … and this is true of any property that is use or trend specific … is that if that trend or use changes, it can be hard to repurpose.
Anytime you are investing in a trend, you want to make sure it’s a trend that has some longevity to it.
And remember that anytime a niche gets hot … it gets CROWDED. So, the earlier you adopt it, the better.
For on 2020 real estate trends … listen in to the full episode!
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