The job market has improved, meaning more people have money to invest. Where are the investment opportunities?
As we jump into 2016, it’s a good time to re-evaluate and determine where and when to make the right investments. The job market has improved, with a steady 5 percent unemployment rate, meaning more people will have money to invest. Where are the opportunities? It depends where you look. Wall Street has had a rocky 2016 so far, but the real estate market shows promise. And, as always, it depends on location.
In a Jan. 10, 2016 report, The New York Times noted the stock market ended in 2015 with a “whimper” and began with a “shudder,” the latter thanks to falling stocks in Asia as the New Year arrived. The United States markets weren’t much better with the Standard & Poor’s 500 index having its worst five-day start in history. But this doesn’t mean the stage is set for the rest of the year. Some financial experts say it is too soon to tell which way the stock market will go, but some predict it could be gloomy by the time 2017 rolls around. While there has been some negative news on the stock market, there is good news for the future of the real estate market.
State of the 2016 real estate market
Over the past decade the real estate market experienced some tumultuous times. The good news is that the real estate recovery that started in 2010 has shown solid strength in the past year. According to Realtor.com, the sales of both new and existing homes were up in 2015, but not all types of sales were up. Sales for second-home buyers, investors and international buyers declined. Loop North reports that homes “should start to appreciate above 2008 levels” this year in the Chicago area; to date they have rebounded 84 percent. Investors putting their money in the right properties can find lucrative results.
5 of the top real estate trends in 2016
Recently PricewaterhouseCoopers (PwC) and the Urban Land Institute (ULI) released their highly respected annual joint study “Emerging Trends in Real Estate.” The study surveyed more than 1,800 participants, from investors to property managers and resulted in some interesting findings:
“18-hour cities” and suburban areas: Small cities have begun to mimic larger cities to provide the convenience and amenities people want. More affordable than their big city counterparts, these smaller markets are expected to attract a lot more attention. Strong growth potential for these smaller cities is anticipated with investors seeking to buy in these areas. Similarly, suburban communities are adding urban components to provide the same conveniences. Evidence shows millennials are going to eventually move out of big cities to suburban areas, but they are not going to want to sacrifice the things they are used to.
“Housing for everyone”: After the housing bubble burst, a lot needed to be sorted out. As the market corrects itself, residential housing demand will increase over the long-term. New housing solutions are taking shape and, over time, will change the dynamics of the market. The good news is that, for investors and developers, there are short-term market advantages right now.
Office space prospects: As jobs continue to be added to local economies, small businesses are playing an important role. As these businesses grow, opportunities for expansion are also expected to increase. Study authors think office space and leasing will grow over the next year as businesses seek new ways to create and use space. People want to live near where they work, and as millennials continue to dominate the workforce, this will affect how offices are laid out and utilized.
Bye-bye parking lots: Years ago buildings were being knocked down to accommodate the growing number of cars. That trend is now reversing itself. The number of younger drivers is decreasing and statistics cited in the report say that miles traveled by motorists aged 34 and younger have fallen 23 percent. Although it will take time to find creative ways to reinvent parking and land use, the PwC and ULI authors suggest this is a trend for developers and investors to watch in upcoming years.
High priority on repairs and solutions: Cities are looking to place priority on repairs, maintenance and solving community problems — everything from the water supply issues, to rail safety improvements, and everything in between. Finding these infrastructure solutions is going to be front and center in the future. With all the improvements and innovations happening in these neighborhoods, opportunities for investors should increase.