The year 2017, just like every year before it, has the potential to be a fantastic year, regardless of what industry you are in. If you are involved with commercial real estate, be that as an owner, investor, or lessee, there are five key things that you must do to make sure that real estate continues to work in your favor. Let’s review these five items.
Economic indicators are used regularly to make predictions about future developments. Following those, it would logical to say that the housing market in Orange County will see its fifth year of increases, which is significant for those who are interested in the income property market. However, 2017 is the year of the wildcard, in the form of Donald Trump. There are very positive trends, but because it is not clear what the Trump policies are going to be, it is hard to make an accurate prediction. If you invest in income properties, then the developments, or possible developments, are very important to keep abreast of. Financial experts have come up with the following six probable developments.
1. A Rise in House Prices
CoreLogic has recently released its latest data.
Every business has a specific set of data challenges, which is why we offer configurable real estate data reports to meet your unique requirements.
They project a 2% home price rise in 2017, which would be the 54th consecutive month. Highest recorded prices were in May and June, which was due to new homes being built, and this increased the overall median price. Projected price rises vary depending on who makes the projections, but they range from 2% to 6%. This could potentially lead to a lower return on investment for income properties.
2. More Home Sales
According to the Chapman forecast, home sales will continue to increase due to the continuation of the economic recovery.
California home prices will continue falling this year and into next, but there’s an upside in that it will allow more people to buy homes.
While they forecast a drop in home prices, this is for the state of California as a whole, not for Orange County. Home sales are predicted to be up across the board. In October 2016, 31,641 properties in Orange County were sold, a 2.3% rise from 2015. Many of these properties were income properties, because there is often a significant rise in house prices in the county. While an increase, this is still lower than the 29 year average.
3. Home Builders Will See an Increase in Work
It is believed that, for the seventh year in a row, there will be a rise in new construction. That this should also increase the number of available construction jobs, thereby further improving the economy.
4. There Will Be a Rise in Mortgage Rates
This is an important factor for those looking at income properties, as they will have higher monthly expenses. The forecast has been revised by California Realtors, who initially estimated a 4% interest rate, but now believe this to be between 4.5% and 5%.
5. There Will Be a Drop in Affordability
It is estimated that the median family income of the average family in Orange County will only cover 60% of what is needed to purchase the median home. This is a particular issue of concern, and one that can affect both residential and commercial property buyers and investors.
Two other reports on Thursday showed that housing affordability could become an even bigger issue in 2017. The Home Price Index from the Federal Housing Finance Agency showed that year-over-year, home prices rose by 6.2% in the third quarter, a record high. And home values rose 6.5% in the year through November, the fastest pace since 2006, according to Zillow.
This could make income properties more interesting, as it would suggest a greater demand for rentals.
6. Rent Hikes Will Drop
This is of particular concern for property investors, including those who invest in family units. With rising interest rates and lower affordability, the fact that there will likely only be 2.7% increase in rent in 2017 may lead to a significant cut in their overall income.
The commercial real estate market in Orange County, CA, continues to boom and expand, so much so in fact, that some experts are becoming concerned about whether or not this growth is sustainable. However, reports have shown that people in the field of business and commercial real estate are very optimistic, in part due to the new presidency of Donald Trump, who has promised more jobs and more business. Hence, Orange County continues to grow, and so is the economy.
The year 2016 has been a year of records for Orange County with regards to real estate. Prices for residential homes reached heights never seen before, in part due to the large number of new homes being built. The landscape of Orange County has changed dramatically, not in the least thanks to the approval of the Platinum Triangle in Anaheim.
Donald Bren, who is the owner of Irvine Co. as well as the chairman of the company’s board of directors, has been named by the Orange County Register as one of the most influential in Orange County in 2016. He is a Newport Beach native and currently owns the largest private real estate empire in the country. In fact, the value of Irvine Co. is believed to be around $15 billion.
The Tri-Freeway Business Park, which is a multi-tenant industrial unit in Anaheim, Orange County, CA, has been sold for $29.45 million. This deal was brokered by the CBRE group, and the buyer, a private individual, has been kept private. The seller, Greenlaw Partners, was represented by Doug Mack, Anthony DeLorenzo, and Gary Stache of CBRE.
QR codes, some say, are the best invention of the 21st century. They offer a unique and interactive communication method, and they can be used anywhere. However, they are still poorly understood, particularly by businesses who could use them to their advantage. This is particularly true in the commercial real estate market in Orange County. This is potentially a huge missed opportunity, particularly when you consider how easy it is to use QR codes (also known as MS tags).
The 3 Hutton Center in Santa Ana, CA, has been sold by Cushman & Wakefield. The 198,161 square feet office tower has been purchase by Cypress Office Properties. They entered into a joint venture with Harbert United States Real Estate Fund. The tower, which is found in the airport district, was previously owned by TH Real Estate, which is part of TIAA Global Asset Management. The sale’s terms and conditions have not been disclosed by any of the companies.
The field of commercial real estate is very different from that of domestic real estate. In the domestic and residential market, brokers and agents deal with actual people. This means they put a focus on friendliness, customer service, and so on. With commercial real estate, brokers and agents deal with businesses, and it is all too easy to lose the human side in that. In fact, it has been reported that customer service in commercial real estate is at an all time low. Good brokers and agents should be aware of this and do all they can to become better service providers.