Ron Cadman Discusses the 2019 Real Estate Outlook

As we move into the second half of 2019, there are certain phenomena that affect, and have affected, real estate investment prospects throughout the year. In the following article, Ron Cadman discusses current real estate trends and conditions that are influencing the market. Ron Cadman is a property management and real estate investment professional, and founder of leading real estate development firms in both the United States and Canada.

While we haven't yet experienced every significant economic event of 2019, there are nonetheless numerous factors that have helped to foretell the state of the real estate asset class. Here are a few conditions that have informed – and continue to inform – the 2019 real estate landscape.

• Lack of new construction. Investors are increasingly embracing value-add solutions rather than building multifamily housing from the ground up.

• The importance of tech in value-add multifamily housing. Multifamily housing repositioning will continue to emphasize smart technology in home climate control, kitchen and bathroom fixtures, and security.

• Improved construction efficiency contributing to reduced building costs. Construction firms are embracing cost-effective solutions, including off-site component assembly, which lead to more affordable housing.

• Millennials' reluctance to commit to home ownership. Several issues, including oppressive student loan obligations, are contributing to Millennials' electing to rent rather than take on more debt by purchasing purchase their homes. (Although unemployment is under 5 percent, the Federal Reserve recently issued a report stating that 40 percent of Americans cannot afford a sudden $400 expense.)

As 2019 home sales stagnate, demand for multifamily housing continues to increase, and is projected to rise well into 2020. Although the economy appears to be strong, the overarching caution exercised by U.S. consumers indicates that the multifamily asset class will generate healthy returns for investors for years to come.

Ron Cadman is co-founder of Phoenix, Arizona-based Investar USA.