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Interest rates and rising sea levels are two of the future trends that real estate investors need to know to determine the right portfolio and strategy. Regardless of the method chosen, investors need to always be aware of the trends going on in life in general, both in the short term and in the long term. This knowledge will influence current portfolio selection and future strategy determination.
The interest rate in real estate
It will take a long time for interest rates to drop as low as 2021 when the epidemic is raging. Rising interest rates again will greatly affect both the residential and commercial real estate markets. When borrowing costs are more expensive, monthly mortgage payments will be higher. At the same time, buyers have to bear higher house prices as construction costs become more expensive.
Affordability, wages, and the job market
In the US, the National Association of Home Builders calculates that every $1,000 increase in home prices pushes about 150,000 homes out of the market. Other reports say about 60% of renters in the US can’t afford to buy a home where they live.
Meanwhile, while job numbers and wages are increasing again as the economy recovers, it has not kept pace with inflation in many places, leading to a series of foreclosures due to the inability to pay the payments. Mortgage. This situation may continue shortly if the pandemic and political crisis are not controlled, affecting the entire economy and the real estate market.
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Real estate bubble
Home prices continued to rise at a dizzying pace even as sales began to show signs of slowing down. Many places witnessed the phenomenon of virtual price increases due to speculation. Although experts say that the market is unlikely to have a bubble thanks to the tightly controlled financial system, the skyrocketing house prices have made the dream of homeownership increasingly remote for many people.
Rent prices are also increasing in many places, especially cities and economic centers. From a positive perspective, this presents great opportunities for investors when buying back bad debt properties and renovating them for rent in the form of mini-apartments, serviced apartments, or even ground houses.
Real estate’s location problem
The trend of working remotely makes more and more people have the right to choose where they live. As a result, house prices in the suburbs or on the outskirts of cities have increased as people rush to buy more spacious and suitable homes. Satellite cities have also become the destination of many residents and investors because they have more affordable land and a more reasonable standard of living.
Supply Chain
Industrial and logistics real estate is becoming the first choice for many investors as supply chain problems and commodity scarcity become more and more serious. In the future, these two types of real estate will continue to maintain the heat because the supply chain problem is unlikely to be solved in the short term.
For small investors, anticipating the development of industrial zones, or pouring capital and related REITs will certainly bring huge and sustainable profits.
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An aging population
The aging population leads to the need for medical care or nursing homes for the elderly. Therefore, this is a trend worth considering for investors in the coming time. This trend will remain attractive in the long run as the pandemic has made people more interested in medical, health care, and spiritual issues.
Sea level rise and climate change
Southeast Asia in particular and the world, in general, are experiencing more and more extreme weather phenomena such as floods, droughts, saltwater intrusion, or forest fires. This puts investors in front of location options to ensure capital safety because real estate is a long-term game.
Not only that, but investors also have to pay more attention to the construction and development of green real estate that is adaptive to climate change to meet new government regulations, and standards of international organizations. credit institutions when providing capital, as well as the increasing demands of customers.
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