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Trends in Real Estate Investing
June 30, 2016
2 min read

If you’ve talked real estate lately, you’ve heard the chatter about the strong U.S. housing market, but have you taken a closer look at the latest trends? Let’s take a look toward the horizon and see what we think is ahead from an investment point of view.

An increasingly robust market
Because interest rates have only climbed slightly and remain at historical lows, buying a home is still cheaper than renting in most markets. Job growth is on the rise. These key factors support a robust real estate market nationwide.

Movement away from the coasts
That said, there are shifts occurring in certain markets that are worth noting. For one thing, coastal cities, which have typically been hot markets, are slowing, excepting for places like San Francisco, of course. Instead, there’s a marked preference for the Southwest region, including Arizona and New Mexico. This trend is partially fueled by baby boomers, and is creating a growth market region-wide.

From 24 to 18 hour cities
Cities that never sleep, like New York, are traditionally and currently hot markets. However, as interest rates begin to creep upward, home buyers who are already struggling to afford those areas could be priced out of the market. As a result, buyers will move out to surrounding markets. Further, as working remotely becomes an increasingly viable and common option, we’re seeing growth in what are referred to as 18 hour cities. This includes trendy areas like Portland, Austin, and Nashville.

Generational housing shifts
Another trend to watch is the generational housing shift. As forty-something members of Generation X recover from the mortgage crisis, they’re moving to better neighborhoods. At the same time, Boomers are scaling down. The result is real estate that may need updating or rehabbing, but which should be perfect for Millennials, who are transitioning to home ownership in increasing numbers as they start families.

Walkable neighborhoods
Walkability is being cited as a key factor trending for many home buyers. Sometimes referred to as Main Street living, this advantage involves being able to walk from your home to a variety of local amenities such as eateries, libraries, farmers’ markets and so on. This is a distinct change from the preference for suburban enclaves that require car travel for any errands. Millennials are moving to suburbs seeking good schools for their children. But they still want that walkability factor. Rehabbers who focus on walkable neighborhoods and developers who create them are likely to do well in this new paradigm.

A clear need for niche lenders
We’ll discuss this more in the future, but it’s definitely worth mentioning now. The increased regulation in the wake of the mortgage crisis has narrowed the scope of who banks will lend to and how they’ll structure their loans. For that reason, as real estate developers and rehabbers work to supply the housing that homeowners are looking for, there’s an increased need for non-traditional lenders like Aloha Capital.

Private lenders have a unique opportunity to step up and fill the gaps left by banks, so expect to hear more buzz about private lending as an investment opportunity.

Kevin Hill
Kevin Hill