Showing posts with label residential real estate. Show all posts
Showing posts with label residential real estate. Show all posts

Saturday, January 1, 2022

2021: What A Year

Ok, I’ll admit it…I wasn’t prepared for the impact that returning to work in person would have on my life and on TRET. Now, 2021 is coming to an end and I find myself yet again writing another end-of-the-year post in which I am apologizing for the recent inactivity on this awesome blog. This time, however, it’s a little different.

2021 marked 10 years since I published the first post on this blog. At the time I was real estate agent and teacher who was about to begin law school and was looking for ways to better understand real estate modeling and real estate finance. I hoped to create a community of like-minded people so that we could explore ways to better value real estate properties and mortgages and discuss the market. Ten years and many experiences later this blog has grown and transformed into a general forum on all things real estate and I am amazed at the direction it has taken. 2021 has been an amazing year for TRET, so let’s take a look at the year in review.

 The Market:

What a crazy year for real estate! 2021 started with an insane housing market in which demand greatly outpaced supply. The pandemic created so much pent-up demand that in some markets, average time on the market was less than two weeks. This state of affairs, was clearly a carry-over from the effects of the 2020 quarantine. As the year progressed, housing prices rose, however so did inflation, depressing any true wealth gains.

Inflation and pent-up demand places the housing market in a strange position, as inflation rises the cost of construction making an the housing supply unprofitable. On the other hand inflation reduces the real gains from selling property, which also makes selling property less desirable. The Fed’s response to this situation and the market in general will be to raise rates, which will lower demand, making acquisitions more expensive. This will lead to a market with inflated prices and high interest rates—a rare market in which buying is undesirable and selling is only mildly incentivized. For housing, 2022 is looking to be a slow year for housing as the market returns to normalcy. That said, the traditional approach to sales and acquisitions will likely be the most successful. CNN Business has a similar assessment of the market, but with a slightly different conclusion. Feel free to check out their article here.

Commercial real estate had a unique year as well, but for different reasons. The year began with depressed asset prices across all classes as businesses struggled to project their physical needs after the pandemic. Although asset values were down across the board, multifamily properties performed the best and proved to be the best way to the whether the storm. Then something even more interesting happened…seemingly out of the blue, institutional investors woke-up and began acquiring everything.

A surge of institutional acquisitions took place during the second and third quarters of 2021. Multifamily, retail and industrial properties started to surge. Office properties were being left behind, but many municipalities began to facilitate their conversion into multifamily properties in order facilitate even more activity in market. Then, just as quickly as it came, the wave was over. In retrospect, it is clear that the major players in the market were looking to move money into real estate to avoid the effects of inflation, but at the time, the frothy commercial market felt very much like a feeding frenzy.

The Podcast:

The 10th Anniversary of TRET saw the start of TRET: The Podcast. Although it certainly wasn’t an easy journey, recording the podcast episodes with my childhood friend and real estate extraordinaire, Conrad Bastien, Jr. was a lot of fun. TRET also branched into TRET Shorts, which were also a lot of fun to make. Expect more in future. The podcast was an opportunity to explore a number of topics in a manner that required even more depth and research than would be required by a blog post. Moreover, the chemistry created on that podcast cannot be duplicated. Please feel free to check out our episodes, which are posted here and on this blog.

The Growth:

This year has also seen TRET expand into the area of guest contributors. We were privileged to benefit from the perspectives of a number of guest authors, who allowed us to expand our content. I am personally thankful for the contributions as they served a motivation to keep TRET going.

So after a year like 2021, where do you go? The only answer is up. Look for more and better from TRET in addition to a migration to a new platform. TRET is growing, we’d love you all to be a part.


Tuesday, August 31, 2021

The End of Summer

Stephon Martin

Waves, real estate, summer, commercial real estate, residential real estate
August is coming to a close and although Summer isn’t officially over until September 23rd, the end of August has an unofficial feel of transition. School will soon have begun for all children in the United States and the country will attempt to push forward out of the shadow of COVID-19. Some areas will forge ahead more successfully than others, but an attempt will be made by all. The beginning of September means that the holiday season is just around the corner. With the impending change of the season, how will the real estate market be affected?

Residential Prime Time

The first few months of the school year, be they August or September, typically trigger a time of reflection for homeowners. The start of the school year is one of the many ways that people mark the passage of time and the beginning of yet another academic year frequently prompts many homeowners to put their houses on the market. The current seller’s market should only serve to further motivate more homeowners to try to capitalize before prices drop. As Bob Vila.com points out, a few select markets have already begun the decline or, in some cases, never quite started the climb. September, October and November will be true indicators of how close to a new normal we really are, both socially and in the residential real estate market.

Commercial Watershed Moment

The current commercial real estate press is praising the bustling commercial real estate market, fueled primarily by multifamily acquisitions and refinances. This praise, however, is a bit shortsighted, as it fails to address the woes of the office market and the real issues of use and change in the retail market. With the economy so tenuous, any good news is great to hear, but commercial real estate has some real questions on the horizon. It seems that most participants in the commercial real estate market are taking a “wait and see” approach, while continuing to invest in the few small pockets where retail and office are making some headway.

Well, that is my quick take on today’s market. I couldn’t let August pass without giving a recap. Please feel free to put your comments below.