BiggerPockets Daily
AI, Built-to-Rent, and Other Predictions of the Future of Real Estate
Feb 11, 2025
The future of real estate is here, with AI revolutionizing home buying and pricing strategies. Climate risks are reshaping investment decisions, prompting some investors to seek opportunities in high-risk areas. Build-to-rent models are rising, providing solutions to the housing crisis. Innovative alternatives like accessory dwelling units are gaining traction, reflecting a shift in how we think about housing. Get ready to adapt your strategies and tap into the latest trends!
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Quick takeaways
- Climate challenges are reshaping investment strategies, with rising insurance costs drastically affecting returns and creating new opportunities for risk-tolerant investors.
- The build-to-rent model is gaining popularity as developers respond to high home prices, providing a viable solution to the single-family rental supply gap.
Deep dives
Impact of Climate Challenges on Investment Strategies
Climate challenges are significantly reshaping investment strategies within the real estate market. Recent natural disasters, including wildfires in Los Angeles and hurricanes in Florida and North Carolina, have led to skyrocketing insurance costs in areas frequently affected by extreme weather. Investors who previously enjoyed low mortgage rates may now find their return on investment compromised as insurance premiums increase drastically, sometimes doubling their costs, thus limiting cash flow. However, more risk-tolerant investors might see opportunities in areas with decreasing property values due to insurance challenges, potentially allowing them to invest in lower-priced properties or properties that require rehabilitation.
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