Last year in 2017, the U.S. economy started with a boom with heavy investments in the stock market and real estate but slowed down during mid-year followed by climatic disasters which solely contributed to approx. $93 billion economic losses which mostly covered up with a major rise in imports at the end of the year – results 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 e-commerce market fuelling the gargantuan warehouses needs for goods storage has expanded drastically in recent past and business analyst already has 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 the pricing goes up as per the market set standards.
Pent-up housing demand among millennials:
Need for housing in the forthcoming lustrum is the second big dominant factor that prevails over other secondary investments and therefore bolstering 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, Las Vegas for job and work opportunities and thus demand for housing apartments will be going to rise up.
Increased Interest rates:
As the Increasing economic growth resulting in the 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 the commercial real estate investors 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 - which is a good news for house owners and landlords.
New Tax scheme favors the real estate
As for now, there are no changes have been made in 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, which is a rapid growth than the average of 2% annual pace over the past seven years.
Why real estate investment brings the hefty return?
It has been always believed that investing in stock market is one sort of investment that brings the 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 with real estate investments. If the investment is made in the right market under right conditions, it can be really helpful in generating the most consistent flow of passive income. Also, you will have the privilege for the increased property value over time with appreciation.
A city’s asset plays a big role
Every city has its key asset which attracts the new visitors and residents – investing
In those cities initially may costs you big, but it definitely yields 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 around that allows residents, tenants, and visitors – to have that live, work and have all needful amenities covered up 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.