Emerging Market Investing
What Causes Real Estate Markets to Boom
©2007 by Wendy Patton and Justin Ryan of Investing Tours, Inc.
Emerging Market investing is very profitable and probably the safest way to invest in real estate. In Real Estate Investing the old adage goes: “Buying a home is about 3 things- Location, Location, Location.” Choosing your market wisely can determine whether you make a fortune in real estate or whether you lose your shirt. As real estate investors we know of one location that shines above all others when it comes to making profits. The Emerging Market.
Emerging Market Investing is the best way we’ve found to make easy, low stress, low maintenance, low hassle investments and get the best possible return. We can all agree that many of the markets in our country have slowed down. This is not a problem as long as you know how to respond to that change. There are always select markets in our country where not only are things not slowing down, but instead are getting ready to increase in value, these are the Emerging Markets.
One thing we wish we knew when we began real estate investing was this: The majority of your real estate investing should be Emerging Market Investing.
Simply put, Emerging Markets are real estate markets in which DEMAND outstrips SUPPLY. We are going to look at 3 main population groups that will have the biggest impact on Emerging Market Investing over the next decade:
BABY BOOMERS ECHO BOOMERS IMMIGRANTS
The Baby Boomers may be the most profitable of these three groups for Emerging Market Investing. The Baby Boomers are the people born between 1946 and 1964, a time when there was a population explosion of newborns. They comprise a population group of 82 million Americans who are in their prime years of earning and also just beginning to retire.
What makes the Baby Boomers so important for Emerging Market Investing? Their demand for vacation homes, second homes and retirement homes. As Baby Boomers approach retirement they are focusing their thoughts on where to spend their golden years. They are showing an overwhelming trend for wanting to live in the warmer states. This trend will have significant demand on the supply of property and will result in fabulous increases in property values.
Many Baby Boomers are not waiting until retirement to buy. Boomers that are buying second homes or vacation homes are often buying now, or will be buying in the near future. According to the National Association of Realtors™ (NAR), Baby Boomers currently own 57% of all vacation and seasonal homes.
The Baby Boomers are influenced by a large number of things in determining the location of their second home, new primary homes and retirement home purchases. The CLIMATE is one of the key choices for many. In addition to the climate Boomers are planning on staying active and are looking for beach, golf, mountain and ski resort communities. For the Boomers that can’t afford to live in those communities they are looking for homes nearby that are more affordable.
One of the key factors in determining where they want to live within the location they select is the AMENITIES. Amenities within their homes, such as first floor master suites, 9 or 10 foot ceilings, granite countertops, tiled floors, plush carpeting and premium kitchens influence their decisions. But just as important are the amenities of the community and the development in which they live. Planned communities, and condominium complexes are springing up around the areas favored by Boomers and they offer a multitude of amenities that keep them selling fast. Golf courses, tennis courts, pools, spas, exercise facilities, walking trails, as well as youth activities are many of the common amenities that are very important to the Baby Boomers. Beyond the traditional amenities Boomers are also favoring things like fishing, kayaking, canoeing, restaurants, lounges, private marinas, concerts, equestrian trails, billiards, volleyball courts, shooting ranges and skiing.
The Baby Boomers don’t want just nice locations, they also want plenty of activities within the location. When Baby Boomers start to buy in these locations they become Emerging Markets, an ideal situation for Emerging Market Investing.
The second population group that will have a large impact on Emerging Market Investing over the next decade is the Echo Boomers. These are the children of the Baby Boomers, and amount to almost as large a population, nearly 76 million. This younger generation is just beginning to enter the first-time home buyers market.
The Echo Boomers are moving to the areas that have JOBS. They are just beginning their earning years and are putting high demands on housing in the areas they move to. Because they are newer to the labor market and are earning less, the Echo Boomers need AFFORDABLE HOUSING. In these areas, they put pressure on the lower cost homes, condominiums and rental units.
They are looking for the technology and convenience. They want wireless internet access, strong cell phone signals, washer/dryer in their units, lawn service, etc. They often favor close proximity to downtown districts, offering many restaurants, clubs and activity.
As such, the real estate investor has opportunities in affordable housing developments, townhouses, condominiums and condo conversions. Job rich areas with affordable housing are additional ideal locations for Emerging Market Investing.
Immigrants are the third population group that will have a substantial impact on Emerging Market Investing. Over the past decade the U.S. Government has started making minority home ownership a priority. Statistically, minorities are less likely to own homes, so many first time buyer programs have been created to help level the playing field. A large portion of minorities that will buy their first homes are immigrants.
Immigrants are contributing significantly to the growth of the U.S. Their presence is a boon for real estate investors, both as a strong rental pool as well as end home buyers. Areas with high concentrations of immigrants will see pressure put on home supply, particularly affordable homes for the first time buyers. Immigrants, like Echo Boomers, will be seeking AFFORDABLE HOUSING for their first homes. This type of demand will push prices on affordable homes higher in these emerging markets.
Looking at the Baby Boomer, Echo Boomer and Immigrant population group gives us powerful details on where the strongest markets over the next decade will be for Emerging Market Investing. Amenity packed locations in warm climates are drawing the Baby Boomers in force. Echo Boomers are seeking job rich locations with technology and convenience for their first time homes. Cities with swelling Immigrant populations and affordable housing also offer terrific opportunities.
Remember, Emerging Market Investing is one of the easiest, most hassle free and profitable forms of real estate investing there is. Not every investor lives in these types of markets, as they change over time. Many of us now live in markets that are just ho-humming along, or worse, are trending downward. We both made the mistake of only investing in our own areas for too long. We know now that Emerging Market Investing provides us with the best profits and the lowest hassle and maintenance. The key for us was to broaden our horizons outside of real estate in our own back yard. Our real estate investments can EXPLODE when doing Emerging Market Investing.