The Whole World Wants to Live Near the Water

People living in the heartland of any country have an outspoken desire to one day move to the waterfront. With worldwide confidence in the economy and real estate markets still pretty much down, it’s no surprise that investors – yes there are still people who don’t live from paycheck to pay check – are looking for safe, long term investments at the moment. But if not gold, silver or in-demand commodities, what makes for a “safe” real estate investment? Do they exist at all anymore?

Sure they do!

Even though there is risk involved in any investment, from stocks to commodities to real estate to bonds, there are certain trends that can be observed among long term real estate investments, that can help you identify strong investment opportunities. Here are a few of those trends to keep an eye out for, and why they make sense.

Population Growth

You don’t need brain surgery to figure out that growing populations create growing demand for housing, which will in turn increase real estate values if supply is less than demand. Start looking at long term population projections for a particular town or neighborhood, and look particularly at desirable locations with no further room for development (fixed supply). And here’s a BIG hint: the fastest vector for population growth isn’t procreation, especially in America. Immigration accounts for the fastest growth, so consider investing in neighborhoods with strong roots for a specific immigrant group, and one that’s still arriving in droves.

Urban Planning & Sprawl

It’s shocking how little attention we in this country pay to urban planning, and the price we pay as a result. Consider for a moment what happens to a town without organized and well-conceived urban planning: developers build further and further outward, wherever they feel they can sell for the highest price, and continue to sprawl outward until they can no longer earn their minimal return. Aside from heinously unattractive stretches of strip malls and cloned two-story housing developments, this creates a virtually limitless supply of real estate, which means (duh!) that values will stagnate or decline in the face of limited demand and unlimited supply.

Water

The whole world wants to be near water, whether it’s a bay, a river, an ocean, a strait, a sound, or even an alligator-infested bayou. But guess what? There’s a finite supply of water-access property in the world, and an ever-growing population desperate to fish, boat, and swim, which means rapidly increasing values due to the growing demand and fixed supply. Beware, however, of certain pitfalls of owning property near water, including floodzones, hurricanes, and difficulty to insure. And the other long term consideration with water is the availability of potable water. It is becoming a major factor for business settlements and consequently residential development.

Stable Institutions and Employment Providers

There are certain employers who are so large, and so stable over time, that they create their own economic center of gravity. Housing, along with all the commercial and support industries that accompany human habitation, will pop into orbit around these behemoths, but certain neighborhoods will always be more attractive to these institutional employees than others.

First, identify some of these institutions near you that might make strong candidates; examples may be large manufacturing, retail warehousing, logistics, transportation, ocean freight facilities, international airports, large government complexes, university campuses, long term military bases, or large medical campuses.
Second, research that institution’s long term plans regarding relocation or expansion, and third, find out where the employees there prefer to live. These neighborhoods can become increasingly desirable real estate, as that institution expands, and the alternative housing becomes farther and with fewer commercial resources.

This list is by no means exhaustive, but should help grease the gears and offer a few ideas. The bottom line is to evaluate long term changes in supply and demand, and to think in terms of a neighborhood’s long term demographic changes.

For those of you familiar with Nassau County Florida and our seaside communities, it should be clear that we really enjoy the best of most worlds.

Good luck, and give Lila a call when you plan to do some happy investing!