US residential real estate markets are undergoing a correction due to affordability issues, with varied performance in different regions.
Depopulation trends pose economic challenges, necessitating policies to make child-rearing more attractive for sustained growth.
Mortgage rates are influenced by economic fluctuations, with potential decreases in case of a recession, impacting real estate investments.
Deep dives
US Residential Real Estate Trends
US residential real estate is shifting, with a correction expected as housing affordability hits a 40-year low. Markets that surged during the pandemic, like Austin and Las Vegas, are now seeing declines. Tampa and Charlotte offer balanced investment opportunities with wage, job, and population growth, while commercial real estate is likely to face a significant decline.
Impact of Population Decline
The trend of depopulation poses challenges, with a decline in young people having children leading to potential economic downturns. Increased focus on depopulation triggers controversy, but data suggests a need for policies to make child-rearing more appealing. Addressing population decline aims to sustain economic growth and productivity while fostering supportive environments for families.
Interest Rates and Market Predictions
Mortgage rates have been fluctuating, influenced by economic shifts like potential recessions. Interest rates are tied to the 10-year U.S. Treasury yield, with expectations of decreasing rates in case of a recession. Real estate investor insights point to varying market performances, with luxury vacation markets like Nantucket likely to experience declines amidst changing demands.
Global Real Estate Trends
European real estate markets like Lisbon, Portugal, stand out for investment potential due to favorable expat policies and capital inflows. Contrastingly, markets in cities like San Francisco and Los Angeles are experiencing declines in prices and population. Commercial real estate, particularly office spaces, faces reevaluation challenges with potential for repurposing into residential areas.
Summary and Insights from Dave Meyer
Dave Meyer, VP of Data and Analytics at BiggerPockets, predicts shifts in real estate with opportunities emerging in markets like Tampa and Charlotte. Commercial real estate could see significant declines, while luxury markets face challenges. Mortgage rates remain subject to economic conditions, highlighting the need for strategic investment approaches amidst evolving real estate landscapes.
Dave Meyer, the VP of Data and Analytics at BiggerPockets, joins Scott to discuss the state of play of US residential and commercial real estate, how to think about investing in various real estate markets, and his predictions for the year ahead. Follow Dave on Instagram @thedatadeli.
Scott opens with his thoughts on population decline, and how our nation needs to make it more appealing and affordable for people to have children.