Last year in 2017, the U.S. economy started with a boom with heavy investments in the stock market and investing in real estate but slowed down during mid-year followed by climatic disasters which solely contributed to approx. $93 billion in economic losses which were mostly covered up with a major rise in imports at the end of the year – resulted in an overall economy of 2.6% annual growth rate.
The three dominant factors that will be a driven impact on the real estate investment:
The rise in demand for warehouse needs with E-commerce growth:
With a tremendous sweep in the e-commerce market fueling, the gargantuan warehouses’ need for goods storage has expanded drastically in the recent past. Business analysts already have estimated the future demands which are going to grow exponentially in the coming years. With demands including for large distribution centers or mini delivery hubs, will still be remaining high even if the pricing goes up as per the market set standards.
Pent-up housing demand among millennials:
The need for housing in the forthcoming lustrum is the second big dominant factor. Housing prevails over other secondary investments and therefore bolsters real estate demands.
It is to be estimated that around 23 million millennials in coming next five years who are currently studying and residing with their parents are likely to be moving to bigger cities like NYC, Los Angeles, Washington D.C., Chicago, and Las Vegas for job and work opportunities and thus demand for housing apartments will be going to rise up.
Increased Interest rates:
The Increasing economic growth results in a rise in interest rates. Real Estate is likely to be beneficial from it. The shift in the mortgage interest rates and properties, and state and local sales taxes are likely to be beneficial to commercial real estate investors. These interest states are in high-cost metro regions like New York, DC, LA, Chicago DC, and the Bay areas. As job seekers and workers, are moving to the suburbs for renting closer to their work areas. This will be good news for house owners and landlords.
The New Tax scheme favors the real estate
As for now, there are no changes have been made to the prevailing FIRPTA (Foreign Investment in Real Property Tax Act), LIHTC (Low Income Housing Tax Credit), carried interest rules, and 1031 revenue reinvestment laws, which suggests that commercial real estate market continues to remain irresistible to both overseas and domestic investors.
Real estate experts forecast the GDP growth to be increased by approximately 2.6% in 2018. This is a more rapid growth than the average of a 2% annual pace over the past seven years.
Why does investing in Real Estate bring a hefty return?
It is to believe that investing in the stock market is one sort of investment. It brings a huge return in a very short period of time. But also, it takes moments of time for it to crash and incur major return losses.
But this doesn’t generally happen in the case of investing in real estate. The investment should be made in the right market under the right conditions. This can be really helpful in generating the most consistent flow of passive income. Also, you will have the privilege of the increased property value over time with appreciation.
A city’s asset plays a big role
Every city has its key asset which attracts new visitors and residents – investing
In those cities initially may cost you big, but it definitely yields a high return in a long run.
Also, many of the small cities like – Portland, Telluride, Aspen, or the other new developing ones, are trying to create an environment. This allows residents, tenants, and visitors – to live, work, and have all needful amenities covered up. It should be with a mix of office, retail and residential spaces so residents don’t have to travel far for their needs. These small cities in the coming years will be a boon for real estate business and investing in these cities will definitely be a smart choice.