One year ago this week, we were in the early stages of the pandemic. We decided to focus our efforts on learning about the potential for change the situation might create, and we decided to write about it in a newsletter we called the Light. In honor of the one-year anniversary of the Light, we are highlighting some of the best opportunities from our 48 publications:
Early in the pandemic, five key consumer shifts emerged: new equates to healthy, surban communities would grow at a faster rate than urban ones, health and wellness were on the rise, work-from-home spaces would take on greater importance, and the trend toward multigenerational living would increase. All of these trends played out, and in February 2021, we worked with a team assembled by Pro Builder Magazine on a concept house (dubbed “The New New Home”) for their “Immersive Show Village” that was highlighted at IBSx.
The housing “restart” was fueled by increased demand from young, first-time buyers who had been waiting to purchase for some time, were in a living situation they didn’t like, had little fear of losing their jobs, and were focused on affordability and monthly payments. We rated the entry-level / first time move-up segment as “Strong” as early as May and by July 2020 it had increased to “Very Strong” where it remained ever since. In September, we declared the active-adult buyer was back, aided by the value of retirement investments and increased confidence in selling their homes at good prices.
Early on, we expect a surge in household and business relocations that would provide new, strategic opportunities for the real estate market. We have seen the move in action over the course of the last 12 months with warm, affordable markets benefiting the most. The Great American Move has taken on even greater meaning, encapsulating the concept that people are relocating, not just to different geographies, but from more dense cities to the suburbs.
Perhaps no other real estate asset class performed as well or garnered as much interest since COVID hit than the single-family rental (SFR) space. We define SFR as a single-family detached or attached home available for rent. We define BFR as single family homes specifically “built for rent.” In 2020 alone, we assessed more than 150 dedicated BFR neighborhoods located throughout 21 states and 41 MSAs. We will easily eclipse that total in 2021. New trends are constantly emerging in that space, including product evolution, particularly in what the industry calls “horizontal apartments.” Often these are high income renters by choice.
In our September 4, 2020 edition, we noted the residential land market had fully recovered during the second quarter of 2020 from spring’s pandemic-induced uncertainty and by the third quarter of the year, 96% of top land brokers were rating their markets as “Hot” or “On Fire.” Limited land supplies and increased demand resulted in massive new home price appreciation in the first quarter of 2021.
We emphasized a niche opportunity for apartment developers—follow the rapidly expanding new home submarkets. We highlighted major growth corridors that continue to experience new home and apartment construction.
We provided key guidelines for developers who are considering the for-rent space vs. the for-sale space. Both sectors continue to expand and we still believe the best strategy for each unique asset depends on location, amenities, schools, and allowable densities, among other factors. The point is that there is no shortcut for great research, and understanding the unique attributes of a project and a market will pay off in the long run.
Thank you to all of our JBREC team members who have contributed to the Light along the way, including Liz Rhee and Asia Inn-Souphomphakdy, who create our awesome infographics each week. We appreciate the continued support and positive feedback from our friends and colleagues in the industry.