Not every national trend will have a direct impact on your investment real estate.

Most are similar to the mid-January “massive cold front devastating the east coast” weather forecast.  Yes, it was below zero with two feet of snow for my son in Vermont.  Yet I was at a conference in Orlando, with most days the temperature hit low 70s. There was a cold front, and it did impact part of the east coast, but not the same way everywhere.

DEBT IS NATIONAL 

The crash following the 1986 Tax Act caused, or at least accelerated, the collapse of local Savings and Loans. Origination today may still be primarily Main Street, but Wall Street calls the tune on price and terms.

As a real estate investor, you do need to maintain awareness of the direction of the cost (and to a lesser extent, the terms) available to other investors (who may be deciding what to do with the property next to you or one day as the purchaser of your property).  

The Federal Reserve is a good indicator of trends in the cost of lending – and they are now doing the right things to pump the economy – as they set the rate to which they lend to banks, but a weekly read of what is happening on Wall Street will better guide you in your decisions.

PERMANENT APARTMENT RENTERS A NATIONAL TREND?

Apartment investing post “Great Recession” became super-hot as it was the only asset class with readily available sources of debt.  Apartment values, due to increased demand to purchase, went up.

Then the sustained recession resulted in less jobs and lower wages. Kids stayed home later in life.  Marriage was delayed.  Building a first house was delayed. Yet apartment prices went even further up in price!

Some forecasters have written that it is a PERMANENT change, that the young will ALWAYS stay home for years after graduation, and NO ONE will ever again get married, and there will be no growth in demand for STARTER homes.  And suddenly, though, the economy got better.  Employment increased.  The percentage of families buying homes increased.  

Don’t bet the ranch on apartments for ever being the ideal investment. Badly located, poorly designed, or horribly over-priced apartments remain a dumb investment.  You better shop around! 

Also, start considering the birth rate. It started slowing years ago.  When less bodies will trigger LESS housing demand?

BOTTOM LINE 

You need to listen to different voices to figure out whether your targeted investment succeeds no matter the national trends.  Run quickly in another direction if your numbers only work with an interest only loan for the life of the investment and some miracle event must occur to drive further down the likely capitalization rate on your ultimate sale.  

Properties, like people, tend not to get stronger as they age!