Archive for the 'Growth Markets' Category
Sweeping changes in the nation’s demographic makeup will have profound effects on the nation’s housing industry, according to “Big Shifts Ahead: Demographic Clarity for Businesses,” a new book by authors John Burns and Chris Porter.
They argue that broad demographic shifts will reshape housing in America in the next decade, creating new opportunities for businesses of all kinds. Rising numbers of female executives, affluent immigrants, growing numbers of younger and older workers and a ballooning retiree population will have a profound influence on residential real estate in the U.S. over the next 10 years, according to Burns and Porter.
Successful real estate investing relies on several factors, but as the old adage goes, “location, location, location” is top of the list. But “location” is a broad term, and evaluating the right place to invest your dollars in real estate means identifying the right market in both the macro and micro senses.
There are many reasons to invest in Kansas City, MO – one of our client’s favorite markets.
Well known for its contributions to the musical styles of blues and jazz, the city is also well known for its Kansas City-style barbecue. And with over 200 fountains the city has been dubbed the “City of Fountains”, allegedly having the second most in the world, right behind Rome.
U-Haul moving truck price disparities usually indicate domestic migration trends long before official migration does. In light of that, we compared the costs of renting a truck each direction to and from 16 cities and learned that:
- People are leaving New York, Chicago, Boston, and Philadelphia in droves (and are being partially replaced by foreign immigrants).
- People are flocking to Portland, Seattle, and many more affordable southern markets.
Families are facing much bigger rent checks this year — especially those living in cities in the South and West.
Rent prices have been rising across the country, but rents for single-family homes in these two parts of the country increased the most in the last year, according to a report from RentRange.
“The biggest increases were in the areas where the [housing] market was most depressed,” said CEO Wally Charnoff.
As you have probably heard, China seems to be on the edge of a significant crash. This has prompted questions of how to predict and prepare for the next real estate market crash in the US. We’ve had a couple of suggestions that tracking NODs (Notice of Default – the first step in the foreclosure process) would be a good indication. We have no crystal balls but here are our thoughts.
There is probably no single, reliable technique for predicting the next real estate market crash because each crash has a different cause. More than once we’ve been asked if tracking NODs would be a good predictor of a coming crash. I believe tracking NODs will tell you what has already happened as opposed to what is going to happen.
The number of people considered to be ‘High Net Worth’ (those with assets of more than $30 million) is predicted to increase by 95,000 over the next ten years. With this in mind, it is expected that a growing number of people will be dipping into the luxury real estate market. So where countries hold the most expensive real estate in the world?
Landlords keep cranking up rents, with annual increases far outpacing price growth elsewhere in the economy, according to recent data released this summer.
Rents in May were up 3.5% from a year earlier, while a gauge for overall consumer prices showed no growth according to the U.S. Labor Department.
In part one of 7 Steps for Picking a Strong Real Estate Market we discussed the first four litmus tests required for investing in a suitable market. In this second part we will cover the last three tests to consider as part of your investment due diligence:
A rental property is only valuable to you if there is a person willing and able to use your property and pay you rent. If you buy a house standing by itself in the middle of a desert, your prospects of finding a paying tenant are poor. You want a hassle-free cash-flow property near lots of well paid people. Those people want to live near their jobs and the amenities they enjoy.
For a property to be a suitable, it must be located in a market that passes the following litmus tests:
Take a drive through the urban portion of any major city and you will likely see cranes and construction crews dotting the landscape, building what appears to be an endless supply of apartment units. Your eyes are not deceiving you. Construction in 24 of the top 27 apartment markets in the country has eclipsed 24-year historical averages.
Many investors frequently make the often damaging (or fatal) mistake of buying property with little to no consideration of the neighborhood and market the property is in. This can be one of the greatest mistakes an investor can make because if you buy in the wrong neighborhood or market, you’ll be stuck with the problems that come with it because of its location. Your only option may be to sell the property at a loss.
I’m currently reading Dr. Peter Linneman’s “Real Estate Finance and Investments” and it includes some great information on how to predict population growth — the number one indicator of real estate price appreciation and rent growth.
Here are some of my notes:
The simple fact is that the best real estate opportunities are not always found in your neighborhood or local market. You may have heard the saying, “all real state is local”. Well, with over 400 markets around the United States, some markets become more favorable than others as they transition through their individual market cycles. That means that at any given time there will be markets that offer you better opportunity in terms of cash-flow and/or appreciation potential.
There are many advantages to investing in markets that make the most sense:
Three powerhouse metropolitan areas — New York, Los Angeles, and Houston — together accounted for one of every seven new jobs created in the country over the last three years. These top three markets added 300,000+ new jobs from 2012 through 2014.
A total of 17 metro areas added at least 100,000 new jobs during that three-year period.