The 2020 Outlook For Real Estate In America

The 2020 Outlook For Real Estate In America

What’s in store for US real estate in 2020?

Uncertainty

If there will be one overriding theme we can count on for 2020, it is uncertainty. Between the chaos whipped up by the media ahead of the presidential election, ongoing rumors of a recession, and the typical seasonal softness in data at the beginning of the year, there will be plenty of uncertainty to go around. Experienced investors will find opportunities to seize on this.

Interest Rates

Internationally interest rates are already heading into the negative. Investors shouldn’t fear higher rates in 2020. If anything, rates may go lower before they get higher.

Real Estate Lending

Between low-interest rates, the ongoing burden of regulations, and commercial real estate defaults on luxury condo developments in NYC, loans maybe even leaner. Good credit borrowers will find plenty of capital available. Others may find it harder to qualify, especially for residential home loans.

Demand for Real Estate Assets

Any further shakiness in crypto and the stock markets is only going to send more investors and capital to the safety of hard assets, income, and better yields in real estate. Specifically, expect investors to seek more direct investments and partnerships.

WeWork

WeWork has lost its investors billions of dollars in value and has left them on the hook for billions in leases and debt. This is likely to have a significant negative impact on the office market, which is already struggling to justify its existence.

Retail

After years of terrible news for retailers, some are trying to make a come back in brick and mortar. Both Apple and Nordstrom have bravely opened new stores in NYC. This Black Friday and upcoming holiday sales data may largely dictate whether more will try a low-interest size or quit.

Rents

Without a complete collapse of the US housing market, there is no reason residential rents shouldn’t just keep growing in 2020. Some areas do certainty seem tapped out on affordability, but there are many renters desperate to sign leases. Even where there are new rent control laws rental rates should rise next year.

Challenges for House Flippers

House flips are taking longer to turn, margins are compressing, and some presidential candidates have posed new vacant home taxes and a 25% house flipping tax. That could encourage more investors to step up and graduate to multifamily investing.

Multifamily Real Estate Investing

Multifamily should continue to be a highly attractive asset class in 2020. It will be a favorite for stability, yields, and value add opportunities. There will be condo deconversions, repurposing other commercial buildings, and renovating existing inventory. Whether the economy continues the bull run or runs into a recession multifamily investors stand to win. Those in areas without stringent new rent controls stand to gain even more.