With inflation dropping from a 40-year high of 9.1% in June to 8.5% in July, Americans are looking for ways to save money, increase their income and invest wisely. In times of high volatility, many look to real estate as a strong option for both increasing cash flow and long-term investment. Real estate appreciates over time, but uninformed real estate entrepreneurs and investors can fall prey to the market. As the Federal Reserve’s nuanced policy decisions and their impact on mortgage rates intersect with the nuances of local markets in many ways, real estate investors, entrepreneurs, homeowners, and customers must navigate this complex landscape. Trying to navigate a mix of factors.
Like many industries, real estate has evolved significantly since COVID-19. In addition to new standards in real estate sales like virtual shows, the entire real estate industry is responding to new trends in America’s work and personal lives. Since the outbreak of the pandemic to this day, many residents and businesses located in large coastal cities have relocated to areas with more space and lower taxes, such as the cities of Florida, Texas and Atlanta. But on the other hand, some of these coastal cities in states that have allegedly lost their inhabitants, like cities in California, may not have seen the dramatic declines they reported. Many suburbs and cities around Manhattan actually benefited from the exodus from New York City, as did the rest of New York City and the cities of New Jersey and Connecticut.
With so many variables, we spoke with industry leaders Burton Wilkins and Neil Anders to get the latest market context.
Interview with Burton Wilkins
Burton Wilkins is a luxury real estate agent working for ONE Sotheby’s International Realty and Goldcoast Sotheby’s International Realty. Known for its client-centric approach, Wilkins has risen to the top of the luxury real estate market in South Florida and New Jersey. Specifically, we are focused on Miami, FL and Ocean City, NJ. Leveraging his background in hospitality, market knowledge, and a network of international clients, this dual-regional luxury agent has leveraged major deals in both cities.
Do you think house prices will continue to rise? why?
We expect home prices to remain stable over the next 6-12 months as interest rates continue to rise. Inventories continue to be very tight and prices are stable.
Do you think the rental housing market will continue to grow? Why?
No, I believe the long-term residential rental market will stabilize and slowly decline over the next 6-12 months. The reason is that it is currently cheaper for consumers to buy than to rent.
How will telecommuting (and hybrid models) impact the market for office space next year? How will this intersect with the residential market?
The new normal of the remote work lifestyle has given business owners the opportunity to relinquish office space. Now that those monthly costs are gone, business owners are applying that budget to their homes. We have a few clients who have upgraded their homes because of this situation.
Business people are spending more time at home instead of commuting to the office. This gives them the flexibility to live far from cities or in previously uninhabitable places. This consumer is also valuing their home more than ever, as they spend most of their time at home. This means you need more space to live and work from home, especially if your significant other is doing the same.
What do you think are the most overrated real estate trends right now?
Buy real estate with BTC or cryptocurrencies. The majority of sellers and title companies will not accept it. It is a phenomenon against reality.
What do you think are the most undervalued real estate trends right now?
Virtual Tours, Metaverse and Similar Technologies.
Interview with Neil Anders
Neal Anders is a Certified Mortgage Advisor and Vice President of Sales for Trusted Rates. With his 20 years of experience in the industry, Anders’ name is synonymous with sales and world-class service. In his previous role as manager of the branch of the American Financial Network in Newport Beach, California, Anders played a key role in helping the branch to average $50 million in monthly sales. Currently, as Director of Sales at Trusted Rate, Anders and his team help potential property buyers purchase new homes, refinance current mortgages, and determine preapproved loan eligibility. Anders has personally invested in over 7,000 transactions throughout his professional career.
Do you think mortgage rates will continue to rise? why?
Yes, I think mortgage rates will continue to rise. Government intervention to lower interest rates has contributed to stabilization, but I believe the economy has reached a point where additional stimulus is needed, and the Federal Reserve has decided against raising interest rates again. But this rise could also lead to higher mortgage rates.
The good news is that some experts believe these increases may not be significant enough to impact homeownership significantly. There are still other options, such as enlisting the help of friends and family who might be able to help pay for it until things calm down again.
How will telecommuting (and hybrid models) impact the market for office space next year? How will this intersect with the residential market?
The market for office space is currently changing. Employees are using telecommuting and hybrid models more often, spending less time at work than they used to. The need for office space will likely decrease.
As a result, the demand for small places is increasing more and more. Employees who don’t use their workstation all day don’t need as much space. Landlords are starting to rent out smaller rooms and apartments to accommodate this trend.
Flexible leasing is becoming more and more popular. Landlords are shortening lease terms to accommodate employees who want to work from home but only need the office a few days a week or a few days a month.
The virtual nature of work has made it possible for businesses to rent out space without actually occupying it. Meeting rooms and other facilities are available. You can save money (or months) by renting only when you need it, instead of paying for something that’s not available for weeks at a time.
What are the most important factors real estate investors are considering when choosing a new market today?
Local rules and regulations are the most important consideration for real estate investors looking to expand into new markets. The laws and ordinances that govern a region can have a significant impact on the amount of return that can be obtained from an investment. Investing in a place may not be a wise decision if there are too many rules that make it difficult to make money.
What do you think are the most undervalued real estate trends right now?
I think the shift from traditional brick-and-mortar to digital is currently the most undervalued aspect of the real estate market.
We have seen many companies shift their focus from brick-and-mortar operations to an online presence. However, I think these dynamics will start to change more and more, especially as technology becomes more sophisticated and accessible.