Your 2019 Real Estate Investors forecast

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“What is in store for next year in the real estate investment world?”

This is indeed the million-dollar question this time of year. Well change is a happening; and mostly for the good. Those who stay informed will flourish those who copy last few years and repeat may be a bit startled.  So pull up a chair, grab a cup of coffee and let’s talk about the 2019 real estate investing trends.

The recent tax law changes from last year are now being realized. As we gather our stuff to do our tax preparations for last year there is much conversation of how these changes have actually affected you. Now you will soon find out for sure as you bite down deeply and go visit your tax person. Your assessment of this may well form your 2019 investing objectives.

TREND 1: 2019 is looking optimistic

Most people see real estate as a solid investment. After all better than 90% of all millionaires created their wealth in real estate.

With more inventories available investors are hopeful for more opportunities. Several locations are shifting from sellers markets to balanced markets, and from balanced markets to buyers markets in other locations.

According to the Consumer Confidence Board, confidence in Dec of 2018 remains strong, but showing a decline. The number of people who consider business conditions to be good fell from 42 percent to 37.2%. The optimism of the job market also took a dip with people expecting jobs to increase fell from 22.7% to 16.6%.

TREND 2: Mortgages rates are on the rise.

Hey, the party can not last forever. We have enjoyed historically low rates for over a decade. Inflation has to be monitored and rates hikes were inevitable. This of course does not make it any easier to deal with when they come knocking on our door. But these rate hikes can be a healthy thing for the overall economy and they still remain historically low. Lending standards have lightened up for a full 14 consecutive quarters (according to the Federal Reserve senior loan survey).

“The Feds said that they’d calm a bit after the latest rise,” says James Everetts, Loan Officer with Fairway Independent Mortgage Corporation. “I see them creeping up slightly, but not multiple times like we saw in ’18.”

These loans remain much healthier than before the bubble as loan standards (while loosening) are still tight enough to prohibit the fallout that occurred leading to the past real estate bubble. Rates will most likely continue to rise a bit in 2019, but the feds have stated they will be monitored.

TREND 3: More supply and for that demand

After 3 years of extremely tight supplies, heading into 2019 we have seen a shift with more available inventory being added into the marketplace during the last half of the last year. 2019 is starting off ready to appease the new winners—Buyers.

TREND 4: Upward pressure on entry level homes.

New construction continues to ramp up supply for move up buyers. However shortages of starter homes (the homes investors like most) continue to be the shortfall. First time home buyers and investors are competing for a class of properties that are not being replenished fast enough will continue to keep upward pressure on builders and developers.

TREND 5: Home values

As supply recovers change will happen for the higher end homes first, followed by medium priced homes and then starter homes. The appreciation growth will also follow suit, leaving the lower priced homes appreciating longer and at a higher pace than the higher price homes. It is estimated by National Association of Realtors that the average appreciation for 2019 will be approximately 3.1% growth rate on a national scale, but rest assured this will not be consistent throughout the country. Lower priced homes will appreciate more and will, as usual, be location driven.

TREND 6: Room for recovery

Residential investment property has hovered around 4.4% of GDP during the 80s and 90s. Today U.S. residential investments are only running at 3.5% of GDP, which is down from 3.8% last year. With stronger demand for rentals than we have experienced in the 80s and 90s, there is a nice growth potential for investment properties.

TREND 7: Single family home rentals is where it is at

The single family homes rental market continues to soar. The largest growing segment in housing is the single family homes rental market. Luckily, this is also the best appreciating class of real estate (the entry level single family home) with a 3/2/2 being the most highly sought-after property for a home buyer and in high demand for a renter. The result is that the investors are well positioned for a great investment potential.

TREND 8: Sustainable real estate, rapidly becoming the new benchmark

Indeed, sustainable real estate means different things to different people; some view it as sustainable buildings (green building/environmentally friendly) others view it as sustainable investments (ongoing predictable investment returns).

Investor’s like higher rents they can charge because tenants do not have any utility bills. They can enjoy higher occupancy, stronger net income, lower vacancy rates, lower insurance bills as insurance companies have lower probability of claims.

There is even a trend among real estate flippers that have embraced the sustainable movement and do their renovations to be environmentally friendly.  Flipping to green standards is known as greenhabbing. In fact, you can even have your flip certified to confirm maximum compliance.

Recap and analysis

With a strong economy, strong rental demand, rising interest rates along with increasing home prices landlords are well positioned to build a thriving investment business.

Would-be-home-buyers may be spooked as evident by the declining consumer confidence. Reports show homebuyers feel they cannot save for a down payment or feel they are no longer comfortable tackling a mortgage which further adds to the need of quality rental housing.

Rental demand is stronger than it has been in decades. The overall number of properties devoted to investment properties is lower than historic highs. As any entrepreneur will tell you if you find a need that you can fill, you have the recipe for a great business. Perhaps this is why so many people, especially millennials, are looking to get into real estate investing.

Sure, prices today are much higher than they were over the past few years, but is it too late? In some places perhaps, but as you know real estate is all about location. Everything we highlighted here is based on a national average. When you find the best markets where the economics and fundamentals are positioned better than the national average you will find dynamic investment opportunities.

As with any other investment, there are risks to investing in real estate. We are not CPA’s or attorneys. The opinions published here are just that, opinions, and does not represent the opinions held by HTBUSA. If you would like to schedule a call with one of us to discuss your investment portfolio, contact us at