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The housing affordability crisis has been growing for a number of years. To address this issue, many people have said the country needs to build more houses — not affordable homes, but more houses in general. Many experts agree increasing the housing supply in pertinent areas with rising housing costs is crucial. However, this solution alone won’t solve the country’s housing affordability problems. Several issues beyond this don't make building more homes a one-size-fits-all solution. Various factors come into play, so here is a further look.  1. NEW HOUSING TARGETS YOUNGER, AFFLUENT INDIVIDUALS You would assume there would be more development where demand is highest — however, that’s not the case. Some cities like Houston have strong housing demand and somewhat affordable housing. Yet, people moving to this area aren’t wealthy enough to spend $2,000-$3,000 per month in rent. Most are in the working-class level looking for single-family homes or apartments, but Houston isn’t building much at all. On the other hand, Seattle’s market is booming from the high-tech sector, drawing in young, single tech-skilled people earning over six figures. However, most of the homes in Seattle are high-rise towers or mid-rise buildings. The average rent is around $2,000 for a one-bedroom apartment, so why is it still expensive to rent housing?  Because development can’t keep up with the pace of the explosive job growth. Therefore, people who get higher-paying jobs in Seattle aren’t finding as many places to live. Even if you do create more supply, this proposes the idea that more housing will filter out expensive ones. Suppose you build a new house and have a family who purchases it. Their old house would now cost slightly less, which would keep moving down the chain and so forth. However, these people are looking for homes large enough for families and the homes you see in cities like Seattle are geared toward affluent individuals. In short, the houses aren’t meeting their needs. 2. RENTERS HAVE LOW INCOMES Part of the issue why the country faces affordable housing options isn’t because there’s a shortage of rentals. In actuality, people lack the income to pay for what’s on the market today. One of the standards for budgeting rent is limiting those monthly payments to 30% of the tenant’s income. However, research shows 40% of rental residents are paying rent exceeding 35% of their income. Approximately 10.9 million Americans spent 50% of their income on rent — some making just $15,000 a year. In fact, 72% of renters making less than that amount were spending half of their annual paycheck on rent. According to Bookings analysis, 44% of Americans between 18 and 64 make low wages, estimating their median income to be $18,000. For households making $18,000, their rent should cost $450 per month at most. However, a report from Redfin shows the median rent is $2,002 in the U.S. Therefore, finding a home to rent for less than $450 is hard to come by and forces low-income renters into homes way over their budget. 3. DEVELOPERS CAN’T FIND SITES TO BUILD ON Another factor is that some cities — such as San Francisco — don’t have any buildable sites. Even if developers find a place, it’s still too expensive.  Plus, houses are already squeezing in together and if a developer does find a buildable site, they’d have to demolish buildings and prepare it. Projects like these can cost millions before breaking ground. Aside from the costs of developing more housing, suppose a developer bought a few homes to build a condo. If you factor in costs for acquisition, demolition and transaction fees, the condo units would still cost more to buy compared to the larger, more affordable homes. Additionally, densifying urban areas doesn’t make much sense in these scenarios since it doesn’t offset the impacts of expensive homes or working-class jobs. 4. SMALLER, AFFORDABLE HOUSES ARE EXPENSIVE TO BUILD With the shortage of affordable homes, you might wonder why developers aren’t building smaller homes. Wouldn’t that solve the high demand for affordable housing? Not exactly. Between the inflation costs and shortage of building materials due to the pandemic, construction costs have risen. According to the Producer Price Index report by the U.S. Bureau of Labor Statistics, construction prices have increased 19.2% yearly.  Of course, it may be more economical to build a smaller home. However, the affordability wouldn’t improve since the median home price was $416,000. Because everything costs more — land, supplies and labor — profit margins would be higher for building a larger home than a small one. Some experts predict a housing bubble will cause growth to slow down and decrease prices. Yet, even if home prices fell by 15%, this drop doesn’t make up for what has happened within the last few years. When you build more homes, inflation is still a primary concern since most people fall within the working-class category. 5. BUILDERS DON’T HAVE BUYERS Another problem is a wave of new homes has hit the market, but they’re not selling. Demand has slowed so much that builders have homes to sell and find themselves without buyers. In theory, the slowdown could continue if developers cave in and drop prices, resulting in a cut on land development. Yet, builders will be behind when the housing market does speed back up and families will still find themselves clamoring to look for a home.  Builders are also uncertain about what the future holds, so now they are looking project by project to see which ones they should pause. That is another issue entirely. In fewer terms, you have too many homes but not enough buyers. From a long-term perspective, this would be challenging on the opposite end of the spectrum. People will want houses, but there are not enough of them. This factor significantly contributes to the affordability problem when you have failed to keep up with demand. The Federal Reserve also works to cut down inflation by increasing interest rates, causing construction to pull back. That makes housing even more expensive because policymakers are focused on the current cost-of-living crisis, making the housing crisis worse. Because the housing market has responded so quickly to these actions, this forces builders to borrow more money to build homes. Then they sell them to buyers who borrow most of the home’s cost. Banks have to raise monthly borrowing rates in turn, causing both parties to pause. WHAT IS A VIABLE SOLUTION TO THE HOUSING AFFORDABILITY CRISIS? Are there any solutions to the problems the U.S. is facing with affordable housing? There are quite a few possibilities to take a look at below. 1. SUBSIDIZING RENT People renting an apartment should make 40 times what rent costs annually. Since 44% of Americans have low incomes, covering the difference between what they can afford and the total cost of housing would help.  The U.S. has already designed a program helping people afford housing with vouchers. The Housing Choice Voucher program has recipients pay the standard 30% of their income while covering the leftover balance. Some landlords are unfortunately reluctant to accept tenants who use these vouchers, but the program still makes a significant difference for those receiving them. It is currently helping millions of households for those that were eligible. 2. UPZONING SUBURBS Rezoning advocates need to look for the right places in cities developing new homes. Currently, urban areas have more zoning options than the suburbs. These diverse zoning areas have permitted large numbers of apartments while developers can build single-family homes on smaller lots.  3. PROVIDING INCENTIVES AND SUBSIDIES
There’s still the problem of costly materials and financing even if builders were legally allowed to start construction. With the expectation of private companies remaining in business during economic downturns, this risks financial ruin. Therefore, they need some way to get a return on their investment. One solution would be to have the government provide housing to counteract the supply cycle. If the government could assist in housing development, this would give the boost America needs to build affordable houses. On the other hand, it would make sense for the government to help families with rising costs by offering a loan program for first-time home buyers. But unless it builds new houses or creates incentives for builders, the housing shortage will continue to combat against the building industry. MOVING FORWARD THROUGH THE GOOD AND BAD TIMES Overall, the primary solution that wins is politics. It’s no secret the U.S. doesn’t have enough housing people can afford. However, it’s up to builders to keep building, whether in an economic downturn or not. Consultancy Encourages Taking 'One Step' Toward Transforming Neighborhoods  585 Niagara Street, a project done by Inc Dev alumni Bernice Radle. (Buffalove Development) Monolithic capital stacks are quaking; REITs are reshuffling; an economic downturn is looming. But amid a flurry of harbingers in the commercial real estate industry, one grassroots consultancy says it’s time for you — yes, you — to step up. Or not even necessarily “up.” “Take one small step off the curb” is the message from Incremental Development Alliance (Inc Dev), a national not-for-profit group of developers that wants to help anyone getting started in real estate. STEP, among the group, is an acronym for buildings that are small-scale, time-enhanced, entrepreneurial and purposeful. In a November workshop hosted by The Hopewell Downtown Partnership (HDP) in Virginia, mentors Ryan Terry and Richard Price championed the idea that everyday citizens who care about their communities are best suited to creating wealth and transforming their own neighborhoods one project (and one step) at a time. The First Step The key to this method is to first identify what’s missing in your local community. If you notice gaps in housing, retail, workplaces or services in your daily life, consider them opportunities. A corner store here, a duplex there; “these are the puzzle pieces that investors neglect,” Price said. Large developers nowadays are seeking returns from large single-family home developments and massive, high-end multifamily complexes, Price said. “But guess what? Most people don’t want to see a lot more of either.” Your advantage over large-scale developers is that you know what types of places actually enhance daily life in your community, he said. “You have skin in the game.” After spotting some opportunities to add value in a market, try to confirm your observations. Economic groups like HDP conduct studies on a given area’s fundamentals and should be sourced for data, Price said. “You really start by trying to understand the basic stuff about your market … like the existing rents and sale prices, and what buyers and renters are looking for.” A rudimentary grasp on the market will help crystalize what type of project makes sense for a given location. But more importantly, Price stressed, is to ask what makes sense for you. To do this, consider a couple of factors. “Do you own or have access to property of any size or kind?” Terry asked. “I don't care if it's 10 square feet on a street corner in the middle of nowhere, or if it's your own house. Is it worth considering it as a potential project?” Alternatively, do you own a business? “If you rent a commercial space, the next logical step is to consider a project that would also allow you to own the real estate that your business sits in.” Knowing someone who owns property can go a long way, too. “A lot of times they inherited it, but don't really know what to do with it, so it just sort of sits there,” Terry continued. “You show up with some cool ideas and figures and all of the sudden, you’ve got a partner.” Having property available is key. If you don’t own the land or have it under contract, “you’re at a high risk of wasting your time,” Price stressed. “I would strongly encourage you to focus first on getting a piece of land under contract and then figuring out what makes sense for that project — not the other way around.” Price started with his own house. “Renovating the basement [into a rental unit] gave me the confidence and a certain amount of savvy to start to understand what the residential real estate market was about in Charlottesville, and how to be a landlord,” he said. The Money Part By this point you’ll have discovered your “why,” Terry pointed out. “You have to understand what you want out of this. You may want to do one purposeful project, maintain a side-hustle or you may want development to be your new full-time job.” From there, an entrepreneurial real estate developer just needs a few more ingredients, according to the mentors: some people to help reinforce goals, whether that’s through investment, promotion or moral support; enough hustle and willingness to not quit when it inevitably gets hard; and, of course, some money — whether that’s yours or someone else’s. “The second step to becoming a developer is the money part,” Price said. “But don’t be scared,” he urged. “I really need to emphasize that real estate finance does not need to be complicated.” "Basically, if you can add and subtract, you can do a pro forma. And if you can do a pro forma, you can be a developer." - Richard Price Start with a pro forma, he said. “If you haven’t heard that term before, it’s basically just a score sheet for real estate development where you keep track of expenses and potential revenue. It answers the fundamental question of ‘how am I going to make money on a project like this?’” Get figures on “soft costs” in your area — things like how much designers charge, how much it costs to get a project approved by the municipality, and what to expect in legal fees. For “hard costs,” gather data on the price of materials and how much builders charge for similar projects. The pro forma will be a living document, Price continued. “You never get it right the first time; it's something to keep going back to and working on.” Luckily, he said, there are plenty of resources available to help create a pro forma for any type of project. But more important than how to get money from a project, is how to get money for a project. Both Terry and Price said they began developing with modest resources. “I had to borrow money from a bank,” Price said. “Then I went and raised a little bit of money here and there from people we knew.” Personal connections in the financial services industry can certainly help, Price said, but even without that, presenting solid fundamentals supported by a plan and passion should make it possible to land a loan. A community development financial institution (CDFI) in your area is also a good starting point, Inc Dev executive director Sherry Early chimed in. “CDFIs have less rigorous underwriting restrictions and they also have patient capital.” “It’s very difficult to do things in this business with bad credit and no cash,” Terry said. “But I’m here to tell you that all sorts of people have done it.” Early said she started with personal savings for her first project in Gary, Indiana, then found it increasingly easier to go through due diligence processes with banks and get loans on subsequent projects.  Entrepreneur Bernice Radle's 585 Niagara Street project. (Buffalove Development) The concept of “other people’s money” is crucial for real estate entrepreneurism, Terry said. Small projects — especially first projects, almost always start with one or two types of partners. Friends and family are a common source of seed money, but it all depends on who you know. Some people may be willing to contribute, but expect too high of returns, Terry said. “But if it’s someone who is otherwise getting 6% from a mutual fund and you can promise them 8%, you’re looking pretty good.” Most professional investors are looking for evidence of stable cash flow or a high return that reflects the risk they’re taking. “But on a first project, you have neither,” Terry said. “You’re high risk and not very potentially high reward,” and you have no long-term cash flow to show. “That’s why friends and family are your best bet.” The other type of partner is someone who can contribute property or “sweat equity," Price said; maybe they are willing to put in labor on renovations or even a contractor who contributes their skills and expertise. The developers recommended steering away from owner-financing for a first project, though. When the owner of a property sells you their property on interest, “typically it’s going to be more risky and more expensive to you as a borrower,” Terry explained. “The rates can be double or triple over prime. If you miss a payment and you’re late, they take that property right back and you’ve lost a lot of money.” Instead, seek out the “most vanilla form of financing possible” for your first project, he continued. “You’re going to make so many mistakes on your first project anyway. Don’t put yourself in a position where that mistake might be fatal.” Size Matters After observing the market, making sense of simple finances and seeking out some capital from friends, family, partners or a bank, Price said, it’s important to “right-size” your project. By that he means that “bigger isn't necessarily better.” The smaller the project, the more straightforward it is to develop, Price said. As you add space, the seesaw between costs and profits becomes harder to balance. “If you’re building a one-story building, it’s basically a simple box,” he continued. “No stairs, no elevator and minimal amounts of mechanical space. Just about every foot you build is rentable.” As you add size, you add complexity, he said. Costs per square foot go up, which means that the rents or sale prices required to achieve returns also go up. “If you start to get into really large-scale development, code requirements change,” Price elaborated. Fire protection requirements, for example, get more stringent. “You start to devote space to nonproductive uses. If you're building stairs, elevators, hallways, mechanical spaces and structured parking, that’s square footage you can’t get revenue from.” Your very first project is likely going to be really modest in scale, Terry said. “It’s likely going to be a renovation — and I’m not talking gutting a building, I’m talking about things like fixing a roof and painting. Maybe you rent it out, but maybe you have to sell it to establish a nest egg for your next project. If you’re starting with $0, like a lot of us do, you’ve got to start small.” Real Estate Development Is Like Farming But this isn’t about flipping buildings and making a quick buck, Price cautioned. “You're focusing on the long-term rewards of the project. You're helping build rich soil to nurture a place that can grow and help you with your endeavors as you're going forward. We call this ‘finding your farm.’” One successful project tends to lead to the next, Price continued. “As you start to do more projects, it starts to improve your neighborhood. The neighborhood starts to offer more opportunities, and suddenly you’re on a roll and instead of asking the questions, you're the person who’s answering questions for other people. Small-scale development tends to build stronger, more sustainable neighborhoods because the projects are typically flexible, Price said. “They're time-enhanced, meaning the buildings are designed to grow and adapt,” he continued. “What made sense 10 years ago may not make sense now, but with small, flexible buildings, it’s easy to convert them into something new.”  'Middle housing' example Eleven: 30 condominiums in Charlottesville, Virginia. (Courtesy of Richard Price) Price’s “farm,” the automobile-centric east side of Charlottesville, Virginia, “had been beaten up by many years of disinvestment,” he said. “It was not a vibrant neighborhood, but I saw a lot of potential; I looked around and said ‘wow, these are nice old buildings.’ There's some great natural features and it’s walking distance to downtown. I was one of those people who said, ‘what can I do here?’ And I started doing.” First it was a six-unit residential infill project that included mixed-use income, Price said. Then an old factory building converted to offices, restaurants and a bakery. Next some townhouses built on an old railroad yard. “Now I’m one of several developers working in this neighborhood and our collective efforts over time have started to transform this forgotten neighborhood into a place that's now in demand.” Ideas for First Commercial Real Estate ProjectsBuildings aren’t even necessary for incremental real estate development, though. The basic building block of urbanism is about bringing people together, Price said. Businesses like farmers’ markets, street fairs and food truck courts are ones you can start partnering with, possibly by hosting them on vacant land, before helping them graduate to brick-and-mortar spaces. Pop-ups and short-term rentals are also good first steps. “Bring someone from a tent into a more permanent solution,” Price said. “One of my colleagues bought an old industrial building and filled it with a bunch of desks, which he rents out as a coworking studio.” “Liner buildings” are another good option. This is a term for very small shops positioned on a street front to mask parking or other unsightly structures behind them, with facades that meet a city’s design approvals. Live-work housing, with a retail component on the first floor and apartments on the second, can also be a great first project that provides two sources of income. Examples of first projects from Inc Dev mentors and mentees run the gamut. Monte Anderson, for instance, bought a long-vacant property on the “wrong side of the tracks” of South Dallas and converted it into an incubator space for young entrepreneurs called Grow DeSoto Marketplace, Terry said. “He chopped a grocery store up into a bunch of 300- to 500-square-foot spaces and the rest is shared facilities and common space.” Part of Anderson’s model includes business mentorship, or basically the “Lord’s work,” Terry joked. “But what he has found is that because these spaces are so small, they are both profitable for him on a per square foot basis, at say $400 per month, but they’re also affordable to the tenants — the youngest of whom is a twelve-year-old who was since able to get a loan from the bank to operate his snow cone business.” Going-in costs can be low with old buildings, he continued, but end up being cash-flow positive with careful management, Terry continued. Alissa Shelton bought an old bank in a Detroit suburb and turned it into a community incubator space called Bank Suey.  Bank Suey, a community space in Hamtramck, Michigan. (Bank Suey) Others have renovated commercial spaces into middle housing, a term used for duplexes, fourplexes, cottage courts and small multiplexes that sometimes have a commercial component integrated or nearby. It’s a type of project Terry often finds himself gravitating toward.
Jenifer Acosta bought an old building with “terrible 1950s cladding that had beautiful brick underneath,” Terry said. “She renovated it and turned it into a commercial use downstairs and loft apartments upstairs.” Look at every building’s potential, he continued. Bernice Radle saw a “really plain commercial building — just a big, brick box, really — and rehabbed it into apartments on the upper floor with commercial uses downstairs. She put a cool mural on it [with the help of an established artist as well as volunteers] and got some cool tenants in there, and it’s a great cash-flow project.” In This Economy? With interest rates and inflation rising, even the biggest institutional players are currently balking on real estate projects, the developers concluded. “This model is not going to save you from all the other stuff that's going on in your economy, okay?” Terry said. “This is not a panacea.” But you, as an individual, “likely have a burning reason why you want to do this,” Terry continued. “You have to have your heart in it, because if you don’t, you’ll quit.” Wealth creation is likely a big reason, but one that won’t set you apart from large-scale developers. “It’s not that we’re out here doing this for charity,” Price said. “We all need to earn a living and hopefully build wealth over the long term. But for me, there’s nothing more gratifying than having the people in this neighborhood walk up to me and say, ‘that's a great project. We’d love to see more of that kind of project here in town.’”  There is not enough affordable housing in the United States. For every 100 extremely low income households, there are only 29 adequate, affordable, and available rental units. That means two parents who both work minimum-wage jobs might wait years to find a safe, affordable place to live with their two kids. With such high demand, why aren’t developers racing to build affordable apartments? It turns out building affordable housing is not particularly affordable. In fact, there is a huge gap between what these buildings cost to construct and maintain and the rents most people can pay. Without the help of too-scarce government subsidies for creating, preserving, and operating affordable apartments, building these homes is often impossible. We’ll explain why. Why is there a gap?
Development costs a lot of money. Developers rely on loans and other sources to fund construction before people move in and start paying rent. But developers can only get those loans and equity sources if the development will produce enough revenue to pay back the loans and pay returns to investors. The gap between the amount a building is expected to produce from rents and the amount developers will need to pay lenders and investors can stop affordable housing development before it even begins, leaving few options for the millions of low-income families looking for safe, affordable homes. The problem is even more difficult when you consider the poorest residents. In many places, the rent the poorest families can pay is too little to cover the costs of operating an apartment building, even if developers could build that building for free. To illustrate this problem, we examined data from the Denver metro area, which is experiencing a growth in rental housing demand but is not a traditionally high-cost city. The rental housing conditions in Denver are largely representative of other US cities. Uses Buildings cost money to build: to developers, those costs are often called uses. The first major use is the land developers plan to build on, called the acquisition cost. In some cases, developers are able to use public land to develop affordable housing. But when that option is not available, there is little a developer can do to lower the land cost. The next major development cost is construction. While a developer could make some decisions to minimize construction costs, they are largely determined by market forces. Construction costs for the various Denver properties we analyzed ranged from $8.8 million to $17.6 million, making construction the largest single use. A third use to consider is the developer fee. This fee is built into the calculation of the development costs because a developer uses it to pay all the costs of doing business: hiring staff, running an office, finding new opportunities, and more. After all, developers can't build if they aren’t going to earn any money from the project. Affordable housing developers can choose to defer a portion of the fee, leaving more money to cover development costs. The developers then recoup the deferred portion of the fee as rents are paid over time. This assumes, of course, that the gap is eventually closed, that the building is built, and that it operates successfully for years. While these are three important uses a developer must account for, other costs include: design fees, construction loan interest, permanent financing fees, reserves, and project management fees. Sources To cover the costs of building and operating a housing development, developers rely on a number of different sources of money. One important source is debt. Developers borrow money from lenders based on the amount they will be able to pay off over time. Though the current market affects the terms of the loan, it’s unlikely developers will ever get a loan big enough to close the gap. To demonstrate this, we look at vacancy rates, generally an indicator of market strength. In a weak market, it might take longer to fill an apartment after a renter moves out, so you’d expect a higher vacancy rate. Repairs to an apartment in between occupants and other factors can also lengthen vacancy. Since the size of the loan is based on the future rent a building is expected to bring in, lower vacancy rates—and the resulting increase in income—should increase the size of the loan. Below, you can adjust the vacancy rate to see its effect on the gap. Besides the loan, developers might fund development through tax credits or grants. These sources come with caveats, however. The tax credits a building is eligible for depend on how much it costs to create the property and on how much rent the developer plans to charge relative to the average income in the area. Additionally, federal, state, and local governments have limited amounts for tax credits and grants, so even if a development qualifies, funding is not guaranteed. Closing the gap Can we close the gap...with bigger loans? It’s fair to ask at this point: if there aren’t enough grants or tax credits out there, why don’t developers just take out bigger loans to get the building off the ground? In short, the lenders won't (and shouldn’t) let them. The size of the loan a bank will make depends on the project's net operating income (NOI), or the amount of money it expects to bring in from rent after accounting for operating expenses. Lenders use NOI to calculate how much debt a developer will reasonably be able to pay off, accounting for interest and recognizing the developer still needs to have some cash flow to cover unexpected expenses. But if the rent is set at rates that a working family can afford, that NOI is going to be quite low. It might even be less than zero if operating costs exceed revenue. The lower the NOI, the lower the size of the loan. Can we close the gap...with more apartments? So if you need a higher NOI to get a bigger loan, why not add more apartments to your building to increase the NOI? Though this will increase construction costs, some costs, like the acquisition cost and project management fee, may remain the same or increase more slowly, helping close the gap. You can see this to your right: the gap for the 100-unit building is proportionally smaller. There are, however, some caveats. The first is a matter of economics. One of the big benefits of developing a building with more apartments is that tax credits might be more cost effective. But just because your project is eligible for tax credits doesn’t always mean you get them. Click the button below to see what happens when you don’t have the tax credit. The other caveats are practical ones. Consider, first, that adding more apartments is only useful if developers can fill them, which might be possible in larger cities but harder as you move farther away from dense urban areas. Additionally, creating large communities of affordable housing has its social and economic downsides, particularly if it unintentionally segregates low-income families from the rest of a community. It all depends on the scale and shape of the particular place. Can we close the gap...with higher rent? Charging residents more in rent might seem like an obvious solution, since it means higher property revenue, which leads to a larger loan. But when does affordable housing stop being affordable? For a building to qualify for tax credits, the apartments must be affordable to families earning no more than 60 percent of the area median income (AMI). Additionally, many rent subsidies are targeted to extremely low-income families, or those earning less than 30 percent of AMI. The current standard is that a family should pay no more than 30 percent of its household income on rent. Anything more is no longer affordable. To make a unit affordable to an extremely low-income family of three, you could charge no more than $540 a month. You could charge up to $1,081 for a family of three and still qualify for tax credits, but now you risk shutting out extremely low-income residents, like a parent of two children earning $21,125 as a retail cashier. Consider that in Denver, the AMI for a family of three is $72,100, so earning 60 percent of AMI means a family takes home $43,260; earning 30 percent of AMI means a family earns $21,630. A married telemarketer would earn $36,544 in Denver—slightly less than 60 percent AMI for a family of two. A person working full time but earning minimum wage, which in Colorado is slightly above the federal minimum, would be just above 30 percent AMI but still well below 60 percent. You can choose to raise rent by either targeting higher-income (but still low-income) renters, asking renters to pay a larger portion of their income toward rent, or both. So...how can we close the gap? Subsidies are essential to closing the gap. Changes to land use, to regulations, or in what and how we build all will help close the gap, but we won’t get where we need to be without subsidies. Subsidies come in different forms. Some, like vouchers or rental assistance, help pay the rent, leaving tenants enough income to pay for other needs and making the property operate sustainably. Others, like tax credits, HOME funds, Community Development Block Grants, and housing trust funds help pay the costs of construction, development, or major repairs. No one subsidy can solve the affordable housing problem. Rather, a combination of programs including federal tax credits, state housing trust funds, local zoning decisions, and public land contributions can help affordable housing get built. To close the gap for affordable housing, especially for the lowest-income households, there almost always has to be assistance for both development and rental income over time.  In recent years, the multifamily real estate sector of the industry has experienced fast growth and change. The demand for and trends in multifamily homes have changed significantly due to urbanization, shifting demographics, and technological improvements. It's critical to look more closely at what the future brings for this fascinating and dynamic profession. This article will discuss the newest real estate trends and forecasts for multifamily real estate. If you’re into property management and interested to learn more about this, then read on! What is the multifamily market outlook for the United States? The multifamily market outlook has in store for the United States is positive, with continued demand for rental properties driven by demographic trends, economic growth, and lifestyle changes. Despite some short-term uncertainties and challenges, such as the rise in interest rates and potential shifts in government policies, the long-term fundamentals of the multifamily market remain strong. According to industry experts, the overall demand for rental properties is expected to remain strong in 2023, particularly in urban areas and among younger generations who value mobility and flexibility. Additionally, the rise of remote work and changing work-life balance priorities is expected to continue to shape the multifamily market, with tenants seeking properties that offer amenities and features that support their lifestyles. The transition toward more extraordinary urban life is also among the most significant trends that are anticipated to persist. Several variables, such as the demand for walkable areas, accessibility to public transit, and a desire for a more active social life, are driving this. As a result, it is predicted that developers will keep constructing high-density housing and mixed-use buildings in metropolitan regions. The increased application of technology in the real estate sector is another trend expected to persist. It includes using virtual reality and other immersive technologies to assist purchasers and renters in perceiving homes. It also involves using AI and machine learning to evaluate data and facilitate decision-making. Meanwhile, positive and negative trends build the real estate market updates to watch. Apart from those above, potential issues may affect the real estate market. One of these is an increase in interest rates, which may make it harder for purchasers to afford homes and cause the market to slow down. The real estate market may also be impacted by changes in governmental policy, such as tax reform or adjustments to immigration laws. Yet, overall expectations for the US real estate market are optimistic, with the sector likely to experience ongoing expansion and innovation. What are the Trends in Multi-family Real Estate? There are various multifamily housing trends. Here are some of them. Sustainable And Green Structures In the real estate sector, there is an increasing focus on sustainability and green buildings, and this trend is anticipated to continue. Multifamily houses are getting increasingly ecologically friendly amenities, including solar panels, green roofs, energy-efficient appliances, and water-saving practices from developers. Smart Home Technologies Renters are growing more and more interested in smart home technologies, and multifamily property owners are beginning to include these amenities in their structures. These include voice-activated assistants, automatic window treatments, and smart thermostats. Growth Of Co-Living Spaces Younger tenants are increasingly interested in co-living spaces, where residents share standard rooms and services. As more developers construct co-living facilities that provide distinctive features and community-focused living arrangements, this trend is anticipated to continue. Flexible Work Spaces There is an increasing need for flexible workplaces and coworking spaces in multifamily buildings as more individuals work remotely or launch their enterprises. In response, builders include these kinds of rooms and other adaptable features like furniture pieces and convertible areas. Amenities For Remote Work A remote workforce will increasingly require facilities like high-speed internet, coworking spaces, and private outdoor spaces; therefore, multifamily buildings must offer these. Focus On Health And Wellness The COVID-19 epidemic has sparked a new interest in health and well-being, and the multifamily market is projected to follow this trend. To accommodate this demand, developers are adding additional health and wellness features to their buildings, such as gyms, yoga studios, and meditation rooms. Smaller Area Units Smaller multifamily flats are becoming increasingly common, especially in metropolitan areas, due to rising housing costs. These apartments sometimes have lower rents, which appeals to younger tenants who value convenience over space. In general, it is predicted that the multifamily real estate market will be driven by an emphasis on sustainability, technology, and communal living arrangements that meet the expectations of contemporary tenants. Keep up with these trends and multifamily real estate predictions as part of your investment strategies! Best Markets for Multi-Family Certian markets provide better opportunities for multifamily property investment than others. Strong economic development, increased employment possibilities, population expansion, and a high demand for rental units are frequently seen in the greatest locations for multifamily investments. The following are a few of the best markets for multi family investments: Austin, Texas With a robust tech industry and a broad economy, Austin frequently ranks as one of the fastest-growing cities in the United States. The city also has a significant demand for rental homes, which attracts multifamily investors to the market. Denver, Colorado Because of its quickly expanding population, Denver has a robust employment market, a developing tech industry, and a high demand for rental homes. Compared to other large cities, the city's cost of living is comparatively inexpensive. Phoenix, Arizona Due to the city's appeal to seniors and young professionals, Phoenix has a robust economy, a growing population, and a high demand for rental homes. Nashville, Tennessee Nashville has a solid economy, a vibrant music and entertainment business, and a burgeoning IT sector. The city also has a relatively low cost of living, attracting multifamily investors to the market. Raleigh-Durham, North Carolina Due to its expanding population and robust employment market, Raleigh-Durham is a rapidly expanding tech cluster with a broad economy and significant demand for rental homes. The ideal markets for multifamily investments differ depending on variables, such as local real estate laws, population trends, employment growth, and economic situations. Before investing in any market, investors should perform careful due diligence and market research. The Bottomline: It's critical to remain current on the newest trends and forecasts for 2023 and beyond if you are interested in the multifamily real estate sector. You may position yourself for success as an investor, developer, or property manager by knowing the variables that are causing a change in the sector. There are numerous tools available to help you keep up with the most recent trends and advances, whether you're an experienced industry expert or just getting started. So don't wait; begin learning about multifamily real estate's future today, and be ready to embrace the possibilities that will come your way.  Despite the fluctuations in the housing market in recent years, real estate investment continues to be an attractive asset class for investors. With the potential to earn recurrent income from rentals, real estate can be a lucrative investment opportunity. Although the current scenario of high-interest rates may give some investors pause, the right investment in the right market can still yield significant returns. Investing in real estate can still be considered a viable option despite the current scenario of high-interest rates in 2023. Real estate remains an attractive asset class for investors due to the opportunity to earn recurrent income from rentals. Record-low mortgage rates and a scarcity of available inventory kept the US housing market strong in terms of buyer demand in the past two years. Although mortgage rates have risen, the strong housing demand is still driving prices up, albeit slowly. The US housing market continues to be a somewhat moderate seller's real estate market, with annual price growth slowing down and inventory rising. Potential homebuyers may still face a bidding war if they are looking for a new house at the moment. As a real estate investor, it is important to crunch the numbers and determine the best cities to invest in. During the pandemic, prospective homebuyers around the United States paid top dollar for homes, with remote employees and their desire for more lavish homes fueling the market. However, with the lack of homes for sale, many potential buyers may be unable to find affordable entry-level housing, predisposing them to transition into single-family rentals. Rental demand is expected to continue to increase in 2023 as a result. The single-family rental market in the US remained robust as renters flocked to the suburbs in Q3 2022, according to Arbor's Q3 2022 Single-Family Rental Investment Trends Report. SFR is seen as a viable alternative for potential homebuyers who are priced out of home ownership. The report showed that SFR rent growth slowed but remained elevated, while build-to-rent (BTR) construction starts reached a new record high of 69,000 over the past year. Additionally, cap rates remained unchanged at 5.3% despite rising interest rates. This presents a great opportunity for real estate investors looking to purchase single-family rental properties. This asset class is best positioned to grow in the coming years. The interest of investors in single-family rental homes has risen to a great extent during this pandemic. Large investors are gravitating toward it. However, it is important to conduct thorough research and choose the best places to invest in real estate in 2023. All real estate is local, so understanding the local factors that can affect your investment is crucial. Single-family rental homes provide an affordable and flexible option to meet the needs of families and individuals in search of quality housing. As of now, institutional investors account for only 2 percent of the 90-million unit market, according to NHRC. This is meager as compared to the US multifamily sector, where more than 50 percent of ownership is held by institutional investors. Hence, the single-family rental market remains an emerging market for both individual and institutional investors. In conclusion, despite rising interest rates, investing in real estate can still provide a reliable source of recurrent income. The single-family rental market is particularly promising, as it continues to grow and attract more investors. It's important to do your due diligence when selecting a city to invest in, but with the right research and strategy, real estate can be a great investment opportunity. Let's take a look at some of the best places to invest in real estate. How To Choose the Best Places To Invest In Real Estate? You may be located anywhere in the world, but the basic principles of the real estate business remain unchanged – you want to choose those places for your investment properties where the return on investment is high. To maximize the returns from your real estate investment you want to buy property in places with the following features:
Don't take any uninformed decision without evaluating the fundamentals of the real estate market you intend to purchase in – is it growing, stable, or declining? Are you planning for short-term capital gains or long-term buy and hold? If you're considering a real estate investment in the coming year, there are a few markets worth investigating further due to anticipated price increases. We looked at data and examined trends from across the US to bring you this list of the 21 best places to invest in real estate. Here are the best places to invest in real estate and buy rental properties. They all have their own set of qualities and disadvantages, but many of them are less expensive than the national average.
1. Boise, Idaho Boise, the capital city of Idaho, is becoming a popular destination for real estate investors for several reasons. Boise's strong job market, affordable housing, growing population, stable real estate market, and low property taxes make it an attractive destination for real estate investors. Whether you are looking to purchase a rental property or invest in real estate for capital appreciation, Boise offers a great opportunity for investors. Here are the top reasons why Boise is considered one of the best places to invest in real estate: Real Estate Appreciation: The real estate market in Boise, Idaho has shown strong growth over the past 10 years, with a home appreciation rate of 217.86% and an average annual rate of 12.26%, putting it in the top 10% nationally for real estate appreciation, according to NeighborhoodScout's data. Despite a lower appreciation rate of 7.62% over the last year, Boise's latest quarter showed a 3.87% appreciation rate, equivalent to an annual rate of 16.41%. However, this rate is lower compared to 80% of the other cities and towns in Idaho. It is important to note that while these are average rates for the city, individual neighborhoods within Boise can vary greatly in their investment potential. Strong job market: Boise has a thriving economy, driven by a strong job market in industries such as technology, healthcare, and education. This growing job market attracts new residents, which drives demand for housing and increases property values. Affordable housing: Compared to other major cities in the US, Boise offers more affordable housing options, making it an attractive option for first-time homebuyers and investors. This, in turn, can lead to steady rental income for investors and the potential for capital appreciation over time. Growing population: Boise is experiencing steady population growth, as people are attracted to the city's high quality of life, outdoor recreational opportunities, and affordable cost of living. This growing population drives demand for housing, which can lead to increased property values. Stable real estate market: Boise has a stable real estate market with a low rate of foreclosures and a consistent rate of home price appreciation. This makes it an attractive option for investors who are seeking stability and predictability in their investments. Boise, ID Real Estate Trends: The median listing home price in Boise, ID was $528.9K in December 2022, trending down -2.9% year-over-year. The median listing home price per square foot was $292. Boise, ID was a seller's market in December 2022, which means that there are more people looking to buy than there are homes available. The market had a total sales-to-total listings ratio above 0.2, which tends to favor sellers. On average, homes in Boise, ID sell after 62 days on the market. The trend for median days on market in Boise, ID has gone up since last month, and slightly up since last year. These housing market trends in Boise are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 2. Houston, Texas Houston is one of the all-time best places to invest in real estate. This city is the home of the US oil and gas industry and offers perennial employment opportunities. Greater Houston is Texas' fifth-largest metro region, with over 7.2 million residents, and its population continues to expand at a rate nearly double that of the rest of the country. Forty-one Fortune 1000 companies are headquartered in the Houston region. Houston ranks fourth in the nation on this measure, behind Greater New York, Chicago, and Dallas-Ft. Worth. These strong macroeconomic factors continue to power the Houston housing market. Houston, Texas has several factors that make it a strong market for real estate investment. Some of the reasons include:
The market had a total sales-to-total listings ratio between 0.12 and 0.2. On average, homes in Houston, TX sell after 59 days on the market. The trend for median days on market in Houston, TX has gone up since last month, and slightly up since last year. These housing market trends in Houston are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 3. Dallas, Texas Dallas is another good place to invest in real estate in 2023. Dallas, Texas is one of the most rapidly growing cities in the United States, and for good reason. It has a thriving economy, a growing population, and a diverse real estate market that offers opportunities for both residential and commercial investments. Dallas is a great place to invest in real estate due to its strong job market, affordable housing, growing population, diverse real estate market, positive real estate trend, and pro-business environment. Whether you're looking to invest in residential or commercial properties, Dallas has something to offer everyone. Here are some of the top reasons why Dallas is one of the best places to invest in real estate:
The market had a total sales-to-total listings ratio between 0.12 and 0.2. On average, homes in Dallas, TX sell after 62 days on the market. The trend for median days on market in Dallas, TX has gone up since last month, and slightly up since last year. These housing market trends in Dallas are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 4. Las Vegas, Nevada How can we miss Las Vegas on our list of best places to invest in real estate? Las Vegas has experienced several booms in its history. And it saw an incredible real estate bust during the Great Recession. Las Vegas’ recovery hasn’t made the same headlines as the 50% or greater declines in home values did a decade ago. Yet its recovery shouldn’t keep investors away. Throughout the pandemic, the Las Vegas housing market was among the hottest in the United States. Las Vegas is a city that is known for its vibrant entertainment scene, luxury casinos, and world-class dining experiences. However, it's not just a great place to visit, but also a prime location to invest in real estate. Las Vegas is an excellent location for real estate investment, with a strong job market, high rental demand, affordable housing, a growing population, investment in infrastructure, a thriving tourist industry, and favorable tax benefits. If you are considering investing in real estate, Las Vegas is a prime location to consider. Here are the top reasons why Las Vegas is one of the best places to invest in real estate:
Pioneer Park is the most affordable neighborhood, with a median listing home price of $290.5K. These housing market trends in Dallas are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 5. Atlanta, Georgia Atlanta, Georgia is a city that has experienced remarkable growth in recent years and is now considered one of the best places to invest in real estate. From its booming economy to its diverse culture, there are numerous reasons why you should consider investing in Atlanta real estate. Atlanta is Georgia’s capital and economic center. It is considered one of the 10 most productive states that contribute to the USA’s GDP annually. Atlanta is a city that offers a lot of potential for real estate investors. From its strong economy to its growing population, there are plenty of reasons why you should consider investing in this city. With its low cost of living, diverse culture, and good returns on investment, Atlanta is one of the best places to invest in real estate in the United States. Here are the top reasons why you should consider investing in this city.
The market had a total sales-to-total listings ratio between 0.12 and 0.2. On average, homes in Atlanta, GA sell after 73 days on the market. The trend for median days on market in Atlanta, GA has gone up since last month, and slightly up since last year. These housing market trends in Atlanta are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 6. Orlando, Florida Orlando, FL is a tourism and entertainment favorite, because of this, it remains a strong real estate investment destination. Investors have a choice of targeting the long-term residential or holiday markets with their properties. Both offer strong returns. Orlando, Florida is a highly sought-after destination for both tourists and real estate investors. With its warm weather, a bustling economy, and world-renowned attractions, Orlando offers a number of compelling reasons to invest in its real estate market. Orlando's strong tourism industry, growing job market, affordable cost of living, thriving business community, and a growing population all make it one of the best places to invest in real estate. With a wide range of investment opportunities available, from rental properties to commercial real estate, Orlando is a market that real estate investors can't afford to ignore. Here are some of the top reasons why Orlando is one of the best places to invest in real estate:
The market had a total sales-to-total listings ratio between 0.12 and 0.2. On average, homes in Orlando, FL sell after 72 days on the market. The trend for median days on market in Orlando, FL has gone up since last month, and slightly up since last year. These housing market trends in Orlando are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 7. Tampa, Florida Tampa, FL is also on the list of best places to invest in real estate. With a population of more than 4 million, Tampa, FL is not only an attractive metropolitan area but is also one of the most frequently visited tourist destinations. Tampa, Florida is a thriving city that has been experiencing steady growth in terms of both population and economic development. It is one of the best places to invest in real estate, due to its growing population, strong economy, affordable cost of living, thriving tourism industry, access to the beach, investment opportunities, and favorable climate. With so many factors working in its favor, it's no wonder that Tampa is a popular destination for real estate investors. Here are the top reasons why Tampa is one of the best places to invest in real estate.
The market had a total sales-to-total listings ratio between 0.12 and 0.2. On average, homes in Tampa, FL sell after 70 days on the market. The trend for median days on market in Tampa, FL has gone up since last month, and slightly up since last year. These housing market trends in Tampa are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 8. Spokane, Washington There are several reasons why Spokane, WA is considered one of the best places to invest in real estate. These include its affordable Spokane housing market, strong rental demand, growing economy, and abundant outdoor recreational opportunities. Additionally, the city has a thriving arts and culture scene, a variety of educational institutions, and a low cost of living, all of which make it an attractive destination for both residents and investors alike. Here are the top reasons why Spokane is one of the best places to invest in real estate.
The market had a total sales-to-total listings ratio between 0.12 and 0.2. On average, homes in Spokane sell after 69 days on the market. The trend for median days on market in Spokane has gone up since last month, and slightly up since last year. These housing market trends in Spokane are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 9. Chicago, Illinois Chicago is also on our list of the best places to invest in real estate. Chicago is the third-largest metropolitan area in the U.S., with almost three million in Chicago and another ten million in the surrounding metro area. Chicago has a large population, a diverse economy, and a stable market. Chicago's strong rental market, thriving downtown, presence of well-developed infrastructure, blue-collar areas with high rents, large population, investment opportunities in revitalizing neighborhoods, affordable housing, investment in public transportation, and thriving start-up culture make it an attractive destination for real estate investors. Here are the top reasons why Chicago is one of the best places to invest in real estate.
The market had a total sales-to-total listings ratio below 0.12 which favors buyers. On average, homes in Chicago sell after 73 days on the market. The trend for median days on market in Chicago has gone up since last month, and slightly down since last year. These housing market trends in Chicago are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 10. Austin, Texas Austin, TX is also on our list of best places to invest in real estate. The Austin real estate market isn’t as big as Dallas, San Antonio, or Houston. Austin is only the fourth largest city in the state. However, the Austin housing market is sizable – it is the eleventh largest city in the U.S. as of this writing, and it is the center of a large metro area. Austin has come up as another tech hub in the last 5 to 6 years. There are tons of high-paying tech jobs that moved to Austin in the last couple of years. As Austin is a young city by many standards, Millennials will be the largest buying force in Austin in 2023, and this trend should continue in the coming years. This is going to be more attractive for the areas being close to neighborhood amenities and close to shopping & hang-out spots. Real estate industry experts think that there is no bubble. Austin’s economy is strong and varied. Overall there is a huge scarcity of homes for sale in Austin. It just hasn’t kept up with the pace of people moving here. Here are the top reasons why Austin is one of the best places to invest in real estate.
The market had a total sales-to-total listings ratio below 0.12 which favors buyers. On average, homes in Austin sell after 62 days on the market. The trend for median days on market in Austin has gone down since last month, and slightly down since last year. These housing market trends in Austin are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 11. Columbus, Ohio Columbus is also on the list of the best places to invest in real estate. Its strong economy, diverse job market, affordable housing, and growing population as some of the key factors that make it an attractive destination for real estate investors. Additionally, Columbus's well-developed infrastructure, revitalizing neighborhoods, and thriving start-up culture, provide ample investment opportunities for those looking to invest in the city's real estate market. Here are some top reasons why Columbus, Ohio is one of the best cities to invest in real estate:
The market had a total sales-to-total listings ratio below 0.12 which favors buyers. On average, homes in Columbus sell after 46 days on the market. The trend for median days on market in Columbus has gone up since last month, and slightly up since last year. These housing market trends in Columbus are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 12. Lakeland, Florida Lakeland, FL also enters the list of the best places to invest in real estate in 2023. Florida is one of the most popular states for real estate investing, and Lakeland is a hidden gem in the Sunshine State. Located in the heart of Central Florida, Lakeland is a rapidly growing city with a strong economy, a thriving job market, and a growing population. With affordable housing, a strong rental market, and a low cost of living, Lakeland offers real estate investors the significant potential for long-term growth and profitability. Here are the top reasons why Lakeland, Florida is one of the best cities to invest in real estate.
The market had a total sales-to-total listings ratio below 0.12 which favors buyers. On average, homes in Lakeland sell after 83 days on the market. The trend for median days on market in Lakeland has gone up since last month, and slightly up since last year. These housing market trends in Lakeland are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 13. Ocala, Florida Ocala, FL finds itself on the list of the best places to invest in real estate in 2023. Ocala, Florida is a small but growing city that offers plenty of opportunities for real estate investors. Known for its beautiful natural landscapes and historic downtown area, Ocala has become a popular destination for retirees, young families, and outdoor enthusiasts alike. In recent years, the city has experienced significant economic growth, thanks in part to its diverse industries, including healthcare, education, and manufacturing. Here are the top reasons why Ocala is one of the best cities to invest in real estate:
The market had a total sales-to-total listings ratio below 0.12 which favors buyers. On average, homes in Ocala sell after 85 days on the market. The trend for median days on market in Ocala has gone up since last month, and slightly up since last year. These housing market trends in Ocala are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 14. Birmingham, Alabama Birmingham, AL also ranks in our list of the best places to invest in rental real estate in 2023. The Birmingham AL real estate market continues to take steps in the right direction. Birmingham, Alabama is a growing city that offers many opportunities for real estate investors. Known for its rich history, cultural diversity, and economic growth, Birmingham is quickly becoming a top destination for both new residents and businesses. Overall, Birmingham offers a combination of affordability, economic growth, and cultural attractions that make it an excellent city for real estate investors looking to maximize their returns. Here are the top reasons why Birmingham is a great city to invest in real estate:
The market had a total sales-to-total listings ratio below 0.12 which favors buyers. On average, homes in Birmingham sell after 60 days on the market. The trend for median days on market in Birmingham has gone up since last month, and slightly up since last year. These housing market trends in Birmingham are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 15. Durham, North Carolina Durham, NC is also one of the best places to invest in rental real estate in 2023. The Durham housing market has made considerable improvements since the housing bubble burst. Only two years after the market crash in 2008, Durham was considered one of the few favorable locations to invest in real estate. With strong population growth and a solid economy, the rental demand in Durham, North Carolina is continuously increasing. Durham, North Carolina is a rapidly growing city that offers a strong economy, diverse population, and thriving cultural scene. Here are the top reasons why Durham is a great city to invest in real estate:
The market had a total sales-to-total listings ratio between 0.12 and 0.2. On average, homes in Durham sell after 69 days on the market. The trend for median days on market in Durham has gone up since last month, and slightly up since last year. These housing market trends in Durham are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 16. Charlotte, North Carolina Charlotte is also one of the best places to invest in rental real estate. The Charlotte metropolitan area or Metrolina has experienced rapid population and job expansion. One reason for this is the city's business-friendly environment. The homebuyers in the Charlotte area have dealt with a persistent seller’s market, which has shrunk inventory and driven up home prices. Charlotte, North Carolina is a thriving city known for its diverse economy, vibrant culture, and attractive quality of life. It is the largest city in North Carolina and the second-largest city in the Southeastern United States, making it a hub for business, education, and entertainment. Here are the top reasons why Charlotte is a great city to invest in real estate:
The market had a total sales-to-total listings ratio between 0.12 and 0.2. On average, homes in Charlotte sell after 70 days on the market. The trend for median days on market in Charlotte has gone up since last month, and slightly up since last year. These housing market trends in Charlotte are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 17. Colorado Springs, Colorado Colorado Springs is also on the list of the best places to invest in rental real estate. Colorado Springs, Colorado is a vibrant city located at the base of the Rocky Mountains. With a growing population and strong economy, Colorado Springs offers a variety of opportunities for real estate investors. Here are some top reasons to consider investing in the Colorado Springs real estate market:
The market had a total sales-to-total listings ratio below 0.12, which favors sellers. On average, homes in Colorado Springs sell after 115 days on the market. The trend for median days on market in Colorado Springs is flat since last month, and slightly up since last year. These housing market trends in Colorado Springs are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 18. Denver, Colorado Denver, Colorado also makes the list of the best places to invest in real estate. Rentals in this city have been gradually increasing over the years. This consistent growth has been driven by a buoyant economy creating jobs. Tourism is also high, driving strong returns in the holiday rental market. Jobs are a major reason why people move to Denver in the first place. Denver is a bustling city that is quickly growing in popularity, attracting an influx of residents and businesses to the area. That explains why Denver is one of the top cities for in-migration, attracting people from all over the state as well as the country. With a thriving economy, stunning scenery, and a range of amenities, Denver is a great place to invest in real estate. Here are the top reasons why:
The market had a total sales-to-total listings ratio below 0.12, which favors buyers. On average, homes in Denver sell after 134 days on the market. The trend for median days on market in Denver has gone up since last month, and slightly up since last year. These housing market trends in Denver are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 19. Raleigh, North Carolina Raleigh is also on the list of best places to invest in rental real estate. Raleigh, North Carolina is a city on the rise, offering a thriving economy, a strong job market, and top-tier amenities. The Raleigh metropolitan area – the city and its surrounding suburbs – account for about one and a half million people. Raleigh offers a range of attractive qualities for real estate investors, including a strong job market, a growing population, affordable real estate prices, top-tier universities, a thriving cultural scene, access to outdoor recreation, and a growing tech industry. These factors make it a great location for real estate investors looking to capitalize on the city's potential for growth and maximize their returns. Here are some of the top reasons to invest in the Raleigh, North Carolina real estate market:
The market had a total sales-to-total listings ratio above 0.2, which favors sellers. On average, homes in Raleigh sell after 63 days on the market. The trend for median days on market in Raleigh has gone down since last month, and slightly up since last year. These housing market trends in Raleigh are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 20. Phoenix, Arizona Phoenix is also on the list of best places to invest in rental real estate. It is becoming a top destination for people living in high-cost areas like Los Angeles & Seattle. Phoenix is a rapidly growing city that has become an attractive market for real estate investors. With a strong and diverse economy, a growing population, and a range of amenities, Phoenix offers many opportunities for those looking to invest in real estate The Phoenix real estate market offers many opportunities for investors looking to capitalize on the city's strong economy, growing population, and range of amenities. With affordable housing, high rental demand, and a range of investment opportunities, Phoenix is a market worth considering for real estate investment. Here are the top reasons to consider investing in the Phoenix real estate market:
The market had a total sales-to-total listings ratio between 0.12 and 0.2, which favors none. On average, homes in Phoenix sell after 78 days on the market. The trend for median days on market in Phoenix has gone up since last month, and slightly up since last year. These housing market trends in Phoenix are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. 21. Seattle, Washington Seattle too makes our list of one of the best places to invest in real estate for those who can afford it. Seattle offers strong economic prospects and a buoyant labor market. This means that rental occupancies are expected to remain high. The city’s population has grown consistently over the last few years with families drawn to the city’s lifestyle. Housing prices have doubled in the past five years, growing twice as fast as the national average since 2016. Seattle’s tech landscape and real estate market are rapidly evolving. Google has upped the size of its new Seattle campus. Facebook has been on a hiring spree in the Seattle area, particularly for its virtual reality arm Oculus, which is growing fast in Microsoft’s backyard of Redmond. GeekWire reported on new HQ leases for top Seattle startups Rover and Outreach. Other companies continue to grow and that will pick up any slack. Tech has blown up Seattle. For the past 5 years, we have seen that this market has priced out many middle-class buyers. Despite the high cost of living, Seattle, Washington, remains a hotbed for real estate investment. The city's strong economy, growing job market, and attractive location make it an ideal choice for investors looking to capitalize on the city's steady growth. Overall, Seattle's strong economy, growing population, limited housing supply, high-quality education, attractive location, and stable market make it a top choice for real estate investors looking for a reliable and profitable investment opportunity. Here are the top reasons why investing in Seattle's real estate market may be a wise decision:
The market had a total sales-to-total listings ratio between 0.12 and 0.2, which favors none. On average, homes in Seattle sell after 75 days on the market. The trend for median days on market in Seattle has gone up since last month, and slightly up since last year. These housing market trends in Seattle are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. Now that you know where to invest in real estate, it's time to figure out how to do it properly. One of the best investments you can make is in income-producing rental properties, but only if you know what you're doing. We can help you succeed by avoiding risk and boosting profit by researching top real estate growth markets. Foreign Investment in US Real Estate: A Look at the Latest Data Foreign individuals and corporations are free to purchase residential or commercial real estate in the United States. Real estate is a global asset class, and foreign investment in the US real estate market has been an important source of capital for many years. The National Association of Realtors® (NAR) publishes an annual report on international transactions in US residential real estate to provide insights into the trends and patterns of foreign investment. Let’s take a closer look at the latest data. Dollar Volume of Foreign Buyer Residential PurchasesAccording to the NAR report, the dollar volume of foreign buyer residential purchases during April 2021-March 2022 was $59 billion, which is equivalent to 2.6% of $2.3 trillion of the dollar volume of existing-home sales. This indicates that foreign investment in US real estate continues to be significant. Number of Foreign Buyer Existing-Home PurchasesThe report also reveals that 98,600 foreign buyer existing-home purchases were made during April 2021-March 2022, which represents 1.6% of 6.06 million existing-home sales. This demonstrates that foreign buyers are still active in the US real estate market. Interestingly, the report found that 57% of foreign buyers who purchased US residential property were already residing in the United States. This includes recent immigrants (less than two years at the time of the transaction) or non-immigrant visa holders who reside for more than six months in the US for professional, educational, or other reasons. Top Foreign BuyersThe report also lists the top foreign buyers in the US residential real estate market. The top five countries are Canada (11% of foreign buyers, $5.5 billion), Mexico (8% of foreign buyers, $2.9 billion), China (6% of foreign buyers, $6.1 billion), India (5% of foreign buyers, $3.6 billion), and Brazil (3% of foreign buyers, $1.6 billion). Colombia also makes the list with 3% of foreign buyers and $1.0 billion. Implications for the US Real Estate MarketForeign investment has been a key driver of the US real estate market, and the latest data from the NAR report suggests that this trend is likely to continue. Foreign buyers are attracted to US real estate for a variety of reasons, such as economic and political stability, a strong rule of law, and a relatively low cost of living compared to other developed countries. These factors make the US an attractive destination for foreign investment. Furthermore, foreign investment can provide significant benefits to the US real estate market. For example, it can boost economic growth, create jobs, and increase demand for US goods and services. However, foreign investment can also have its downsides, such as driving up home prices and reducing housing affordability for US residents. In summary, the latest data on foreign investment in US real estate from the NAR report highlights the ongoing importance of foreign buyers in the US real estate market. While there are potential benefits and drawbacks to foreign investment, it is clear that the US real estate market remains an attractive destination for global capital. References:
 Navigating interest rate disruption in CRE, bank and hospitality execs on the state of lending, Trepp’s April CMBS report, and office buildings are ripe for multifamily conversion Navigating Interest Rate Disruption in Commercial Real Estate The inflation rate has cooled some as mid-2023 approaches, allowing the Fed to slow the pace of its rate hikes. But for many, the damage is done, with the fallout still reverberating, especially in commercial real estate (CRE). An ebook from PwC—“Navigating interest rate disruption: How real-time data can facilitate better CRE decisions amid volatility”—provides an overview of the CRE market and some advice on how to manage through. The report looks into a combination of factors, including economic and geopolitical forces, the ripple effects of Covid, increased construction costs, inflation, and more. Sections of the 9-page report (with excerpts) include:
 Six Bank and Hospitality Executives Discuss the State of Lending Amid Bank Failures
Lenders and hospitality executives at the 2023 Meet the Money national hotel finance and investment conference commented on the current state of the banking crisis. Six of their comments were published in Hotel News Now: Ash Patel, president and CEO, Commercial Bank of California; Alan Reay, president, Atlas Hospitality Group; Matt Mitchell, vice president, Hall Structured Finance; Bruce Lowrey, managing director of investments, CIM Group; Matt Bailly, vice president of real estate, Prospera Hotels; and Keegan Bisch, vice president of originations, Stonehill. Read their comments here. For more from the conference, see this article from CoStar: “Five Key Takeaways on Hotel Investment from Meet the Money Conference.” For more on how bank failures could make hotel financing harder to find, click here. CMBS Delinquency Rate Holds Steady in April, But Office Rate Continues to Rise This is an excerpt from Trepp’s Delinquency Report (May 3). To access the full report, click here. “The Trepp CMBS Delinquency Rate held steady, but the segment that everyone continues to watch closely saw its rate move higher again in April 2023. The Trepp delinquency rate was unchanged in April at 3.09%. Declines in the retail, lodging, and multifamily rates offset a small increase in industrial loans and a bigger increase for offices. “Office remains the most heavily watched part of the market as firms look to aggressively reduce space. Sublease space is at or near record highs in many markets as demand from big tech firms has eroded sharply. In addition, many companies are letting leases expire or are renewing for smaller footprints. “Last week, Microsoft announced it would offer up several hundred thousand square feet in Seattle. The tech bellwether has already announced plans to relinquish more than two million square feet in that city. One in Three Office Buildings in Major North American Cities Could Be Ripe for Multifamily Conversion The combination of 1) companies (especially tech firms) continuing to lay off people by the tens of thousands, 2) the ongoing shift to working from home, and 3) the current U.S. housing shortage has caused landlords across the country to seek innovative ways to fill their millions of square feet of empty space. “Up to 34% of office buildings in 14 major North American markets could be potential candidates for adaptive reuse. Looking at more than 26,000 buildings, office to residential conversions could open the door to potential housing for thousands of families in as many as 8,996 properties,” according to global commercial real estate advisor firm Avison Young. “Adaptive reuse is an important conversation we are having around the art of the possible, to demonstrate how this potential solution contributes to placemaking and to the revitalization and vibrancy of our neighborhoods—particularly our downtown cores,” said Sheila Botting, Principal and President, Professional Services, Americas at Avison Young. “We must reimagine how we want to live, work and play. Adaptive reuse is one of the key components of how we do that as a community.” For more, click here. Kaufman Development is buying Franklinton’s Idea Foundry, the largest makerspace in the world5/20/2023
 Kaufman development’s massive Franklinton development project, Gravity, has a massive new acquisition to its name. The Idea Foundry, a 65,000 square foot former factory located at 421 W. State St. billed as “the largest makerspace in the world”, will be purchased by Kaufman, to become part of the Gravity community. Gravity’s second phase, which is currently under construction, is located across State Street from the Idea Foundry. Created in 2008 by Alex Bandar, the Idea Foundry moved to its current Franklinton location in 2014. Today, it houses more than 500 entrepreneurs and makers, and is home to a litany of state of the art tools like laser cutters and 3D printers. According to a press release, Kaufman will purchase the Idea Foundry from owners Nancy Kremer and Christopher Celeste. Bandar will continue to operate the space, which will now be backed by Kaufman’s resources.
“Kramer and Christopher took a scrappy, grassroots community of makers, put us in a rocket ship and launched us. Now, Kaufman is refueling us to take us even higher,” Bandar said in a press release. “There is already so much synergy between The Idea Foundry and Gravity, and this will allow us to amplify and accelerate our growth and impact in remarkable ways. This takes us from being a space for creatives to being a district for creatives, with opportunities that will be unique to any makerspace in the world.” Gravity tenants will have access to the Idea Foundry under the change in ownership, and the space could see a variety of potential new additions, such as building out the Foundry’s basement, rooftop and parking lot, creating an artist-in-residence and entrepreneur-in-residence programs, and creating pop-up spaces for artists and makers.  Nation's Biggest Mall Landlord Steps Up Efforts To Diversify, Transform Its Retail Centers Simon Property Group, the nation's largest mall owner, expects to spend roughly $1.5 billion building 2,000 multifamily units and hotel rooms as it looks to add density and expand some of its retail properties in new ways.
The Indianapolis-based landlord estimated it will have construction of the projects completed over a five-year span, CEO David Simon said Tuesday on a first-quarter earnings call. He discussed the real estate investment trust's pipeline of apartments and hospitality properties while pointing to what he described as the company's successful redevelopment of Phipps Plaza in Atlanta, a mall that now has a Nobu hotel and restaurant and Life Time fitness center on its site. Mall owners around the nation have been diversifying and adding density to their centers, bringing in nontraditional retail uses to help drive foot traffic and to take the place of vacant anchor tenant space and unused surface parking lots. And now Simon Property is stepping up its efforts on that front. “We have several densification projects under construction and a pipeline of identified projects," David Simon, who is also the company's chairman and president, told Wall Street analysts. "Now that’s not going to happen overnight, but that’s going to happen over the next few years," he said. "So that to us is a real opportunity.” Simon Property expects to start work on several of these projects this year, but the CEO said the REIT is "frankly being a little bit cautious." Simon said, "We’re still permitting some things in California and the Northwest. So we’re going to just see how the world is." Plans for Texas, California and Florida Asked about the cost of the multifamily units and hotel rooms, Simon said it is hard to isolate them from overall mall redevelopment efforts. "But my instinct would be probably about a billion and a half dollars. ... Somewhere in that range" for the construction, he said. The CEO didn't offer too many details. But he said some of the residential units are planned for Austin, Texas; Orange County, California; and Seattle. In terms of hotels, they will be headed for Florida, as will some residential units, according to Simon. “It’s kind of where you would expect it to be, where supply and demand is in our favor,” he said. The REIT is also considering building a hotel on Cape Cod, Massachusetts, because there would be a demand for it there, according to Simon. The CEO didn't specify which malls, if any, the 2,000 units would be built and added to. But Simon did refer to the reimagining of Phipps Plaza in the Buckhead section of Atlanta. "As we give back real estate through our redevelopment efforts, the big focus is on where we can add some mixed uses, because we do think that what we did in Buckhead is having a tremendous impact on the overall value of that real estate,” Simon said. Possible Joint Ventures There are several ways the company could finance the construction, according to the CEO. “I think we will do selective [joint ventures] on certain of the residential development," Simon said. "And it also may be that we could potentially bring in third-party equity, too. We’ll look at each deal individually. But that’s certainly a possibility.” Last October, Simon Property acquired a 50% stake in developer Jamestown as it looks to expand and wring new revenue from its portfolio by diversifying its shopping centers. Jamestown has been involved in landmark projects such as Chelsea Market in New York City. The CEO also said leasing demand is strong at Simon Property's malls and that the properties are getting a boost because tourism is coming back. |
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