The COVID-19 pandemic, declared a global health emergency by the World Health Organization in 2023, continues to have lasting impacts on various sectors, including real estate investing. The shift towards remote work has created new opportunities in the real estate market. Here are some key real estate investing trends for 2024:
Commercial Real Estate
The office sector has experienced continued decline, with a nationwide 13.7% office vacancy rate and leasing activity running approximately 30 percentage points lower than pre-pandemic levels. While this may pose challenges for those with depreciating positions in commercial real estate, it presents an opportunity for investors to enter or expand their holdings. With an expected $2.2 trillion in commercial mortgages set to mature by the end of 2027, market distress may offer opportunities for investors with available capital to acquire properties.
Opportunities in the Sun Belt
The Sun Belt, consisting of 18 states from central California to southern North Carolina, is home to approximately 50% of the U.S. population as of April 2024. The region has seen 80% of the country’s population growth over the past decade. The shift to remote work has allowed people to live in areas of their choice, as jobs are no longer concentrated in large cities. Lower cost of living, property values, and taxes in the Sun Belt present opportunities for investors in residential properties.
Single-Family Housing Shortages
The migration to the Sun Belt and its suburbs has led to a shortage of single-family homes, with a shortfall of approximately 7.2 million homes reported in February 2024. Meanwhile, the demand for single-family housing is increasing as millennials enter the home ownership phase, while the supply remains limited. This situation creates potential opportunities for property management and home construction investments.
In Summary
Traditional metropolitan areas may continue to see a decline in the commercial real estate market, providing opportunities for investors to acquire properties at favorable prices. Additionally, housing prices in the Sun Belt’s suburban areas are likely to remain high due to demand, increasing the need for residential rentals, property management, and new home construction opportunities.
