According to the 2014 Urban Land Institute report released at their annual planning conference in Chicago, we are about half way through the real estate recovery market. Or I think we are about 2/3 of the way there. It has been slow and painful, but there are some excellent markets out there that are thriving.
The report and conference highlighted a number of housing trends we can expect to see playing out over the next few years, based on surveys and interviews with real estate developers, investors, lenders, services and builders.
The Millennial generation are changing the market, and the real estate movers and shakers are increasingly interested in where this generation is headed. A number of the cities have seen increased economic activity in the real estate sector led by this generation, particularly Austin, Seattle, Portland and the Twin Cities in Minneapolis.
Investors, developers and builders are losing some interest in the so-called 24-hour gateway cities — San Francisco and New York City — and have developed more interest in cities like Dallas and Portland, where there are more housing deals to be had.
For example, in 2011 only New York City and Washington, D.C. had good prospects for real estate investors and developers, according to the ULI report, but now Austin, Boston, Dallas, Houston, Miami, Orange County, Portland, San Francisco, San Jose and Seattle make that list — and D.C. actually dropped out.
There’s optimism among those surveyed by ULI that lending standards will loosen next year. That is straight up conjecture in my opinion. The interesting thing that is happening to fill the void is a concept called “shadow banking”. Shadow banking is similar to traditional bank lending, but it’s done outside banks and can therefore get around bank regulations. Borrowers going this route will find a hodge-podge of private funds, wealthy individuals, family offices, and refugees from other lending markets, according to the report.