From Cities to Suburbs: Real Estate Signals of Recovery
All you’ve heard about over the last few years is how the real estate market is dying. It’s not really recovered all that much from the 2008 crash, but it’s on the road to recovery – or so we’re told. But, now, there are signs that real estate is actually making a comeback. It’s not going to “bounce” back like the crash never happened. Instead, there are going to be some long-term trend changes that will surprise everyone who doubted the resiliency of this market.
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Millennials Are Driving Long-Term Buying
Millennials may have more to contribute to the real estate recovery than previously thought. While younger people aren’t snapping up homes on the market, they are driving the demand for apartment units and other large development projects.
The kind of real estate investment needed to provide homes for these people, who are coming out of college, will help build a nice commercial base for the real estate market to build off from. No, it’s not a residential boom, but it is a stable foundation, so to speak, because renters won’t be able to speculate in the market.
They won’t be flipping homes, trying to be the next TLC super-star with a hit T.V. show. No, they’re normal people working normal jobs who just need a place to live.
Second-Tier Cities Will Provide A New Foundation
Second-tier cities are going to lay a new foundation for growth. While NYC will always be the king of real estate, cities like Houston and possibly Minneapolis might be “queens.” In fact, Minneapolis is number 9 on a list of the top 10 cities for developers.
Why? It’s a city that’s attractive to youngsters. It’s where the jobs are right now, and it’s got a midwest charm that many college grads don’t want to give up. In truth, there are a lot of things that are driving the move west. It could be the types of jobs out there. It could also be that younger people aren’t forming the traditional household of their parents and grandparents.
It’s more common to see two men or two women living together these days. It’s also more common for couples to be jet-setters or just country folk who don’t want kids but love the idea of wide open spaces.
Future Job Growth Will Control Real Estate
Job growth is definitely going to be the new driver of real estate growth going forward. People aren’t going to soon forget getting burned by banks selling high-risk mortgages, and the market not accepting their resale value. More than that, people aren’t going to forget being upside-down on their home with no way out.
No, more jobs, higher incomes, and increased stability will determine whether people start buying homes once again.
Renting Is The New Buying
Renting is a lot like buying, but without all the responsibility. Some people still cringe at the idea of leasing a home or apartment. “Renters” aren’t as “with it” or financial responsible as owners – except when they are. That’s what the 2008 financial crisis taught us – that renters were the smart folks not playing inside the real estate bubble. Going forward, expect to see the renter population grow as people seek to uncouple their home from homeownership.
Guest Author
David Coleman is an economist with a heart for the everyday person. He often blogs about industries that affect everyday lives, from automotive to food production to the housing market.
