2019 Market Forecast
Expected Air Date: 2/11/19
The 2019 Trend Report
It’s possible there are two destinations in front of you – the place you want to be, and the place the market is heading. The general market direction is due to a variety of forces, none of which are in your control. But what if it is going in a different direction? What if the opportunity lies in an area beyond your expertise? What if your success strategy is based on certain market fundamentals but the market is behaving differently or perhaps even the opposite way for your plan to succeed? In some ways your success in life and business is to find a path to your own ultimate destination that rides along with the market forces that are outside of your control.
Over the past few years if you have been a single family fix and flip investor and your strategy has been to buy anything in the hot area even if your margins are thin, relying on price increases to make your money, you will find that in 2019 this game is up. Starting now, or actually six months ago, you MUST buy them right – no fudging on the margins – or you will rue the purchase day on sale day.
If you are a passive investor in a REIT that owns malls and retail space, you’ve done well over several years, but the last couple of years have been a kick in the pants. Do you hang in there, knowing that the American retail market is bound to bounce back (and paying attention to the fact that many successful online retailers are now opening brick and mortar stores?).
My point here is simple and it is this: For continued success, you need to pay attention to trends and respond appropriately. Today we are going to talk about the trends we expect in residential and commercial real estate for 2019 and before the show is over, I’m going to make some suggestions about how to respond to trends in general and these trends in particular. So hang on folks…
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Topic: The Trendy RE Investor
- Home Prices up, but not as quickly.
- Mortgage rates rise, only slightly.
- Millenials are the majority of buyers.
- The RE Market is not going to crash.
- Opportunity Zones
- E-Commerce in Real Estate is a non-impact conversation piece – STILL.
- E-Commerce for everything else will continue to drag down retail space.
- Construction Costs are on the rise
- Technology for RE will continue to improve.
- Senior Living Communities will increase.
- E-Commerce will create more demand for warehouse space. Smart and multi-level.
- Online retailers will continue to open brick and mortar stores.
- Foreign investor demand for US properties will increase.
- Institutional investors are heading to secondary and tertiary markets for yield. This usually happens before a recession.
- Grocery chains will move further online.
- Office Spaces stable, shared or co-working spaces continue to be popular. WeWork will not show a profit.
- The Amazon HQ losers will see economic benefit from the competition.
- US hotels will break occupancy records in 2019. Expected to be up 66.2% this year, the 10th consecutive year of growth.
- Go where the buyers are;
- Sell what the buyers want;
- You’re not an artist, you’re a manufacturer;
- The market will not conform to your wishes or hopes. You conform to it.
Specific for 2019:
Legal and financial disclaimer
- Millenials are buying homes and want walkable suburbia. Let’s develop it, or focus there.
- Study areas saturated with single family investors and ask, “Where will they go from here?” Get there second.
- Early bird gets the worm, second mouse gets the cheese.
- Watch for the opportunity to invest in medical office space in the caribbean. Rich people are going to get the medical care they want. When they can’t get it in the US they will go where they need to. You may not like it, but why waste energy protesting? Make money accommodating the market demands.
- Find a use for abandoned malls and strip shopping centers and you will cash in HUGE. Here’s a hint – employment opportunities for the newly relocated millenials.
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Motivational Thoughts for the day
- “It always seems impossible until it’s done” –Nelson Mandela