Save or Spend? A Real Estate Story

Save or Spend? A Real Estate Story

In my first years as a real estate broker, I learned a lot.  I became a part of many families’ life stories. I was helping first-time buyers, sellers, and those wanting Real Estate as an investment.  In 2008 though, I along with many others were caught in the middle of the Great Recession.  We all had to band together, to save our homes and our community.  No one, not even the experts, could predict what would happen.  Even banks trying to save themselves were willing to renegotiate the loans they provided, and luckily that helped keep families safe in their homes.

Now looking back, it was around 2012 when we noticed things had shifted.  Most people were afraid to buy anything during the previous years, but some did, and wow did they benefit from taking the risk.  Investors came in strong and were able to create generational wealth, adding rentals to their portfolios which were held and then resold several years later.  Also, the few first-time buyers who did buy were now in a great position to make a move.  Most of them rented out that home and bought themselves another.  Little by little, we saw confidence return and our economy better. The return on investments was the greatest for those who had purchased and could sell in this window. Much like I am predicting today. 

Currently, there is a 6.8 million house shortage in the USA. Add to that supply chain issues for new home building materials, and interest rates, while going up, are still relatively low. So, even in the wake of different economic cycles, conditions, and COVID-19, the demand for multifamily real estate assets has continued to remain a stable area of investing and even growth. 

      These last few years were my busiest years.  Buyers were able to secure mortgages with interest rates we may never see again, and Sellers saw multiple offers helping them maximize their opportunities.  They were able to get what most of us call Luck but it’s really the moment when Opportunity meets Preparation. That’s what we are looking for now.

      Not sure if you know, but Salem’s population will grow by 50,000 over the next 10 years.  I’m sure many of us are already seeing it happen. There is new construction everywhere bringing with it lots of jobs! New homes are sold even before the foundation is poured.  We should celebrate that, the fact so many people are willing to invest long term in our great city. I believe this is due to several key factors, the same factors that I believe will keep real estate a hot investment through the 2022 summer:

– Money supply growth. Higher volumes of capital are held by pension funds, endowments, insurance companies, private equity, venture funds, and family offices, all pursuing a limited set of attractive investment opportunities.

– Wage disparity and the cost of living. As the wage gap and income disparity across the U.S. widen, and the population grows, the lower middle class is being forced to find more affordable housing alternatives. The result is an increasing demand for value-add properties.

– Homeownership trends. Homeownership levels remain near 20-year lows at 63%, and rental demand continues to grow. Stringent borrowing requirements imposed by traditional lenders make it increasingly difficult for the lower middle class to purchase homes. In addition, millennials are increasingly forgoing homeownership and moving to larger cities than prior generations fueling further demand for multifamily units.

      Now after two decades as a real estate broker, I am once again seeing the new wave of “unpredictable” times.  Many have worries like inflation, rising interest rates, rising rent and sale prices, etc. and they are keeping buyers on the fence.  Even with higher wages, plenty of job opportunities, and homes not selling as fast as last year, there is still hesitation. My best advice is, “ Don’t wait, no one knows what life will bring. If anything, this is the beginning of a new story that is going to be told one day!”

Save or Spend? A Real Estate Story

In my first years as a real estate broker I learned a lot.  I became a part of many families’ life stories. I was helping first-time buyers, sellers, and those wanting Real Estate as an investment.  In 2008 though, I along with many others were caught in the middle of the Great Recession.  We all had to band together, to save our homes and our community.  No one, not even the experts, could predict what would happen.  Even banks trying to save themselves were willing to renegotiate the loans they provided, and luckily that helped keep families safe in their homes.

Now looking back, it was around 2012 when we noticed things had shifted.  Most people were afraid to buy anything during the previous years, but some did, and wow did they benefit from taking the risk.  Investors came in strong and were able to create generational wealth, adding rentals to their portfolios which were held and then resold several years later.  Also, the few first-time buyers who did buy were now in a great position to make a move.  Most of them rented out that home and bought themselves another.  Little by little, we saw confidence return and our economy better. The return on investments was the greatest for those who had purchased and could sell in this window. Much like I am predicting today. 

Currently, there is a 6.8 million house shortage in the USA. Add to that supply chain issues for new home building materials, and interest rates, while going up, are still relatively low. So, even in the wake of different economic cycles, conditions, and COVID-19, the demand for multifamily real estate assets has continued to remain a stable area of investing and even growth. 

      These last few years were my busiest years.  Buyers were able to secure mortgages with interest rates we may never see again, and Sellers saw multiple offers helping them maximize their opportunities.  They were able to get what most of us call Luck but it’s really the moment when Opportunity meets Preparation. That’s what we are looking for now.

      Not sure if you know, but Salem’s population will grow by 50,000 over the next 10 years.  I’m sure many of us are already seeing it happen. There is new construction everywhere bringing with it lots of jobs! New homes are sold even before the foundation is poured.  We should celebrate that, the fact so many people are willing to invest long term in our great city. I believe this is due to several key factors, the same factors that I believe will keep real estate a hot investment through the 2022 summer:

– Money supply growth. Higher volumes of capital are held by pension funds, endowments, insurance companies, private equity, venture funds, and family offices, all pursuing a limited set of attractive investment opportunities.

– Wage disparity and the cost of living. As the wage gap and income disparity across the U.S. widen, and the population grows, the lower middle class is being forced to find more affordable housing alternatives. The result is an increasing demand for value-add properties.

– Homeownership trends. Homeownership levels remain near 20-year lows at 63%, and rental demand continues to grow. Stringent borrowing requirements imposed by traditional lenders make it increasingly difficult for the lower middle class to purchase homes. In addition, millennials are increasingly forgoing homeownership and moving to larger cities than prior generations fueling further demand for multifamily units.

      Now after two decades as a real estate broker, I am once again seeing the new wave of “unpredictable” times.  Many have worries like inflation, rising interest rates, rising rent and sale prices, etc. and they are keeping buyers on the fence.  Even with higher wages, plenty of job opportunities, and homes not selling as fast as last year, there is still hesitation. My best advice is, “ Don’t wait, no one knows what life will bring. If anything, this is the beginning of a new story that is going to be told one day!”