This is a question being asked around the country and the world. And it’s a question asked of us all the time… COVID-19 or no COVID-19. Many investors are exclusively focused on big, deep discounts, and granted those are always appealing when you can find them. And yes, if there ever was a time for some bargain hunting, now might be the time. We are hearing of and have seen a few pretty discounted deals, but not nearly as many as some imagined.
Why? We think for two reasons:
1. The divide between buyer and seller pricing expectations is too far apart. Buyers are feeling entitled to discounts as deep as 50%. In the real estate industry, we often speak of Seller greed…well, buyers currently appear to suffer from a similar affliction!
2. The volume of cash that has been stock-piled over the past few years anticipating a recession is unprecedented. Add to that a flood of Government-fueled capital. The more capital, the more bidders. The more bidders, the higher prices go. We can’t ignore supply and demand.
Here are six primary considerations you might want to factor into your search:
1. Identify and evaluate long-term trends, not just short-term trends. Hurricanes, fires, mudslides, tornadoes, snowstorms, and yes, viruses come and go. Some take more time than others to heal. Often the best buyer negotiations happen during and after storms. Beware of storms that deliver ‘bargains’ that are bargains because the storm has exposed their long-term weakness.
2. Where are the “jobs of the future” going? These areas are almost certain to have a growing economy too.
3. Which areas have the infrastructure in place, or have planned and funded to allow for growth?
4. Which areas have the education for the “jobs-of-the-future”?
5. Which areas have local governments that have a healthy balance between responsible, efficient governance and business-friendliness? Real estate is an ultra-localized entity. In some cities, things vary from neighborhood to neighborhood, but in others, they can vary from block to block!
6. Which areas deliver a solid quality of life? Today more than ever people will care about this. Life is short.
Immediate returns are as important as long-term capital gains for real estate investments. We realize that there is a multitude of other considerations, but the six above are the ones we see as important at this moment in time.