Värde believes there are substantial opportunities in certain segments positioned to outperform the broader U.S. housing market, which entered the pandemic from a position of relative strength. The unique nature of the disruption of COVID-19 then caused supply and demand factors to play out in a very different way to a typical downturn. The immediate effect has been to reduce supply and bring demand forward, as homebuyers seeking more space accelerated single-family homebuying decisions, helping to support prices.
Government policy has also played an important role, providing short-term stability to the market and preventing extreme scenarios that could have had a destabilizing effect. In particular, through stimulus, generous unemployment benefits and policies on forbearance, government policy has prevented the traditional translation of severe economic damage and high unemployment through to housing prices.
As the market is gradually weaned off this support, Värde expects a far more nuanced picture to emerge, caused by the differing impact COVID-19 has had on sectors, geographies and age groups. Secular trends accelerated by the pandemic, including the desire for more suburban housing, and demographic trends will create clear winners and losers.
With a great deal of uncertainty surrounding the future environment, Värde continues to focus on assets that are likely to perform well in all scenarios. Assets that provide inflation-protected income streams and have strong levels of underlying demand, such as active projects in desirable locations, offer the most attractive opportunities. For example, Texas metro areas offer opportunity and affordability, a combination that many other large cities don’t.
“People in Texas have a better shot at getting some of the things associated with middle-class life,” says Joel Kotkin, professor of urban development at Chapman University in Orange, CA. “Also, Texas offers great choices for city lovers. If you live in some other states and desire a truly metropolitan area, you might have a single good choice. For example, New York has New York City. Illinois has Chicago. Georgia has Atlanta. Yet unlike most other states, Texas has several major cities to choose from — Houston, San Antonio, Dallas, Fort Worth, Austin and El Paso.”
Lisa Brown has more than 30 years of experience in corporate communications and marketing management with organizations including Grubb & Ellis, Marcus & Millichap and NAIOP.
Email the Author
Reach over 250,000 Commercial Real Estate Professionals with Connect
Connect CRE reaches the top commercial real estate players nationwide and across all property types, offering you a variety of ways to showcase your team, your expertise and your brand to CRE decision makers.
The home for CRE news and everything you need to stay informed on deals, trends, and transactions, providing a platform to get your brand in front of your target audience.
Daily CRE Emails
Reaching over 150,000 inboxes across the nation every day, Connect’s Daily News emails provide advertising opportunities specific to your market.
Bi-Weekly Property Sector Emails
Focus your advertising on emails dedicated to your property sector and stay visible to current and potential clients.
Position your team as experts in your field with content created by Connect’s editorial team and published on Connect’s news emails. Showcase your intelligence and broaden your reach.