2016: Five Markets to Watch

[Nic Walling]

According to PWC’s annual Emerging Trends in Real Estate report, 2016 is the year of the secondary and tertiary markets. “They continue to be more attractive on a relative opportunity basis than some of the gateway cities. Gateway cities, we know, are places people want to be, but we are thinking of cities like Nashville, Charlotte, Indianapolis, Louisville, Portland, Austin, Raleigh, Durham. These cities continue to attract lots of people. There are a lot of places that people love to live and work; they are manageable environments and have a better value proposition.”

The 2016 edition of the annual report alludes to a shifting trend in real estate investing. There is greater emphasis placed on the secondary and tertiary markets and the economic drivers and investment opportunities piquing investor’s interests.

Emerging Trends in Real Estate 2016 reports the Top 5 Markets to watch this year are as follows:

1. Dallas/Fort Worth- Impressive employment growth is the story behind the Dallas/Fort Worth metropolitan area’s rise to the top of this year. The outlook for the single-family market remains very strong. The market continues to benefit from strong investor interest and a strong local development community.

2. Austin- PWC reports that Austin remains an attractive place to live for all generations. With that, surveyed market participants expressed concerns that Austin may be growing faster than the local infrastructure. The 2016 outlook for all property types in Austin is well above average, but survey respondents were particularly favorable toward single-family and retail.

3. Charlotte- Good job and population growth, along with the development of urban centers, continues to make the market attractive to residents. The housing sector remains the strongest asset class in the Charlotte area.

4. Seattle- The market has become a popular choice for both domestic and global investors. A growing population base and legitimate constraints on supply make the single-family housing market the most attractive.

5. Atlanta- Solidly in a sweet spot with regard to growth and new supply, the market is enjoying strong growth in key sectors of the economy without the typical concerns about oversupply.

The general consensus is strong growth and increased opportunity within the residential sector amongst the Top 5 markets (and beyond). According to RealtyTrac's Q2 2015 U.S. Home Flipping Report, more than 30,000 homes were "fixed and flipped" over the last 12 months, accounting for 4.5% of all single-family home sales during that time. From the investor's perspective, single family rentals (SFR) have become a popular and lucrative investment strategy.

If you are an investor in the market looking to acquire rental properties, Colony American Finance is a leading provider of financing solutions to residential real estate investors. We provide attractive long-term debt products for stabilized rental portfolios, as well as credit lines for new acquisitions.