I was asked recently if the surge in multifamily construction had reduced my excitement for multifamily investments specifically, and investment real estate generally. In a word: “NO!” In a phrase: “HELL NO!” First of all, current projects in the pipeline are still below the amount of units to replace those not built during the Great Recession. Secondly, there has been a fundamental change in the way many look at renting: there has been a huge increase in “lifestyle renters”…those who can afford to buy a home but prefer the simplicity of leasing. Third: I believe investing in Bonds right now is a guaranteed loss, and the stock market has expanded so fast and so long I don’t think that horse has the legs for much more. Fourth and most important: Investments have a cycle of highs and lows. Most real estate asset types in most locations have hit bottom and are starting to go up. Heck…don’t take just my word for it.
In an Associated Press article published today, Charles S. Rugaber cited some very telling statistics from the last period provided by Core Logic, a highly respected real estate data provider:
- US Home prices rose 10.5% (year over year)…the biggest gain since March 2006.
- Oregon’s price increase of 14.3% was the 4th highest of the 50 states.
- Oregon homes prices have recorded 14 months of increases in a row.
- Current for sale inventory is only at a 4.7 month supply. (Typically we consider 6 months to be supply neutral…any less than that means a Seller’s Market!)
Rising home prices make affordable apartments more attractive. Steady job creation and record low mortgage rates have helped as well. Rising home prices will sustain the housing rebound and provide fuel to lift the economy.
Investment Real Estate Profits Are The Key
So why am I so bullish on investment real estate? Investment real estate is entering the part of the cycle where buying now maximizes profits. Contrast that with bond yields at historic lows, virtually guaranteeing a loss of buying power. The Stock Market breached 15,000 points for the first time in it’s history today, and the S&P hit 1,617 points yesterday…it’s all time high. Don’t buy at the peak…buy at the bottom…that’s where the profits are made. Hell yes I’m bullish on investment real estate. You should be too! Contact me, Rick Bean, at 503.577.1034 or rick@rosecitycre.com, today!
PROLOGUE: I originally wrote this over a year ago…and its still true today. The fundamentals for real estate in general continue to be strong, and Portland, OR multifamily is one of the strongest markets.