Have you thought about investing in build-for-rent? Build-for-rent communities are designed to fit the privacy and affordability needs of younger buyers shopping for a mortgage loan and boomers looking to downsize.
Real estate can be a refuge.
Your New Year’s celebrations aren’t complete without a portfolio review. As stocks continue to fizzle and pop, real estate investment strategies may look more promising. Historically, real estate has outperformed the stock market, acting as a stabilizer for investors when volatility takes hold. These eight real estate trends are the ones to watch in 2019.
Residential undergoes a generational shift.
Home ownership may have a new face in 2019 as younger buyers enter the market, while older homeowners make their exit. “Many millennials have recovered from the 2009 crash and have managed to find jobs that will allow them to afford homes,” says Nick Giovacchini, director of client services at AlphaFlow in San Francisco. As baby boomers age, they may be looking to trade down from larger homes to more affordable options, such as smaller rentals or senior living facilities. Giovacchini says high-end home sellers may have to reduce prices as millennials increase demand for more affordable housing. He says opportunities for investors lie in senior living housing, entry-level homes and condos.
Opportunity zones heat up.
Created by the Tax Cuts and Jobs Act, opportunity zones are new territory for real estate investors. Peter Muoio, executive vice president and chief economist at Ten-X Commercial, an online transaction platform for commercial real estate, says opportunity zones are on track to be the hottest trend in commercial real estate for 2019. “With valuations at cycle highs and fundamentals waning, the tax incentives offered by these programs are massively attractive, especially as not all of these zones are created equal,” Muoio says, acknowledging numerous cities may prove to be diamonds in the rough. As capital flows in, certain submarkets could see increased volume, and “increased liquidity is a positive for the commercial real estate environment.”
E-commerce remains a disruptor.
The retail landscape is in a state of flux as brick-and-mortar stores attempt to stem the e-commerce tide but 2019 may bring even stiffer competition. “Many consumers find it easier to purchase goods online,” says Jonathan Lewis, founder, and CEO of JLJ Capital, potentially threatening traditional retail’s survival. “E-commerce is forcing many retailers to close store locations because the money they take in isn’t enough to cover the cost of their rents,” Lewis says real estate investors who want to maintain a position in traditional retail should consider hair and nail salons, restaurants, yoga studios, and gyms – services not accessible via e-commerce and may be better positioned to survive market downturns.
Contact Jeff Cline at SVN | SFRhub Advisors
SVN | SFRhub Advisors
2400 E. Arizona Biltmore Circle
Phoenix, AZ 85016