Real Estate Remains a Hot Investment in Summer 2022

For those worried that the housing market is about to cool off, Swapnil Agarwal, CEO of Nitya Capital & Karya Property Management, has encouraging words for investors.

“Currently, there is a 6.8 million house shortage in the USA,” Agarwal says. Add to that supply chain issues for new home building materials, and interest rates, while going up, are still relatively low. So, even in the wake of different economic cycles, conditions, and COVID-19, the demand for multifamily real estate assets has continued to remain a stable area of investing and even growth, Agarwal explains, pointing to several key factors:

– Money supply growth. Higher volumes of capital are held by pension funds, endowments, insurance companies, private equity, venture funds, and family offices, all pursuing a limited set of attractive investment opportunities.

– Desirable foreign investment. The U.S. continues to be viewed as a safe haven for foreign capital; investors increasingly seek tangible assets with current income and downside protection.

– Wage disparity and the cost of living. As the wage gap and income disparity across the U.S. widen, and the population grows, the lower middle class is being forced to find more affordable housing alternatives. The result is an increasing demand for value-add properties.

– Homeownership trends. Homeownership levels remain near 20-year lows at 63%, and rental demand continues to grow. Stringent borrowing requirements imposed by traditional lenders make it increasingly difficult for the lower middle class to purchase homes. In addition, millennials are increasingly forgoing homeownership and moving to larger cities than prior generations fueling further demand for multifamily units.