INVESTMENT PROPERTY STATISTICS
Thanks to millennial renters who are staying home longer and baby boomers who are tired of yard work and property maintenance, the rental market is burgeoning. While business might be booming, the rental market still has its ups and downs. If you want to become a landlord that can stay in the race for the long haul, you’ll want to do your research ahead of time. Successful landlords must understand the law, negotiate different personalities, and adapt to various problems that can pop up at any time. There’s a lot more that also goes into being a successful landlord, which makes understanding the job and the market essential prerequisites before diving in. The statistics below are intended to help those who are considering becoming a landlord.
International Commercial Property Trends
- Dollar volume of U.S. real estate purchased by foreign buyers reached $4.3 billion in 2019 among NAR commercial members. A decline in global growth and low housing inventory contributed to a drop in foreign investment in U.S. residential real estate in 2019.
- China accounted for the largest share of foreign commercial buyers, at 20% in 2019. Mexico is the next largest country of origin, at 11%, followed by Canada, at 8%. These three countries have been in the top five list in the U.S. since 2016.
- According to Real Capital Analytics, acquisitions of U.S. commercial real estate, from cross-border capital inflows, declined to 49.1 billion in 2019 – a 48% decline from the $94.9 billion level in 2018. Even as the United States economy outperformed other countries in terms of economic fundamentals, cross-border flows declined in 2019 as acquisitions by institutional investors fell to $30 billion from $69.8 billion in 2018.
- In 2019, the largest cross-border flows in U.S. commercial properties came from Canada ($13.8 billion), Germany ($5.9 billion), Switzerland ($3.5 billion), South Korea ($2.6 billion), and Hong Kong ($2.3 billion). Apartment and industrial properties have increasingly attracted foreign capital compared to other assets.
- 31% of the UK’s commercial property is owned by reits, crowdfunded and collective investment schemes. Overseas investors own 29% of the UK’s commercial property.
- The average sale price for luxury homes nationwide fell 1.6 percent to $1.55 million in the first quarter of 2019. Living luxuriously became more affordable, relatively speaking.
- As of July 2020, the median home value in the United States was $248,857. United States home values went up 4.1% year-over-year in July 2020. Zillow predicts they will fall -1.5% by July 2021.
- Denver has a record of being one of the best long term real estate investments in the U.S. Since 2015, the median home price in Denver has appreciated by 45.65% from $310,000 to $451,513.
- 19 of the 20 major U.S. cities continued to experience moderate to minimal house price hikes, according to Standard and Poor’s, with Phoenix posting the highest increase of 5.83% during the year to Q2 2019. Only Seattle saw a house price decline of 1.32% during the year to Q2 2019.
- Homes that are staged sell 25% faster. Seventy-seven percent of buyers’ agents said that staging a home makes it easier for buyers to visualize the property as their future home.
- Virtual house tours are most important to buyers that fall within the 53-71 age range. Photos and online information about properties were more important to Millennials whereas real estate agent contact information.
- Those who view a listing with a virtual tour are twice as likely to be interested in booking a reservation there. And among 18-34 year-olds in particular, prospects are 130% more likely to book based on a tour.
Things Buyers Look For
- 86% of buyers go for previously owned homes instead of new ones. Buyers who purchased previously-owned homes were most often considering a better overall value at 33%.
- For 78% of home buyers, neighborhood quality is more important than home size. Most people would rather live in an enjoyable neighborhood, even if that means sacrificing some space.
- The suburbs are the number one choice for 51% of home buyers. The least favorite option on the housing market in 2019 among all age groups was a resort area.
Real Estate Prices
- Commercial prices are up 4.5% in major metro areas. There has been a shift in the flow of investment into commercial real estate in the smaller metro areas creating an opportunity for investors.
- Commercial prices are up 6% in non-major metro areas. Secondary metro areas are growing faster than most of the large metro areas.
- By property type, the apartment sector has been the best asset class, followed by the industrial sector. Apartment prices have increased by 147% since Q1 of 2010.
- Industrial property prices increased by 75% since Q1 of 2010.
- The national vacancy rate held steady at 9.7% in the second quarter of 2020. This could be due to healthy pre-leasing levels of newly delivered office assets.
- In the first quarter of 2020, Houston, Texas had the highest vacancy rate for large office properties at 21.5 percent. Following Houston was Dallas, Texas (16.3%), Washington D.C. (15.1%), and Atlanta, Georgia (14.2%).
- Boston, Massachusetts had the lowest rental vacancy rate for large U.S. metro areas in 2019. The rental vacancy rate was 1.7%.
- There are 226,000 empty homes across the U.K. A majority of these properties are not in livable condition.
- 54% of people use local and regional banks to source financing in commercial purchases.
- In May 2020, the average interest rate for a conventional 15-year fixed-rate mortgage (the cheapest type of mortgage) dropped to 2.69%. This is the lowest rate it’s been in over seven years.
- In 2019, there were 117,000 new homes financed by the FHA (Federal Housing Administration) sold in the United States. This was a 58% increase in FHA financing from 2018.
Real Estate Property Statistics
- The total housing unit estimate as of July 1, 2019 was 139,684,244. The owner-occupied housing rate was 63.8%.
- Properties of 10,000 square feet or less make up 72% of all commercial buildings. The small market makes up a smaller fraction of deal volume but accounts for a larger share of buildings.
- High-quality apartments with an array of resort-style amenities went mainstream this decade. At the very top of the quality scale, rental units located in Class A+ and Class A buildings represent 40% of the 2.4M built this decade.
- Apartments built in the past decade have been getting smaller. 2017 marks the only year in the past decade when completed apartments were larger than the year before.
- The all-time record for new home sales was in July of 2005 at 1.3 million units. The financial crisis over the next few years caused this number to drop significantly.
- In 2017, 14% of buyers purchased brand new homes, while 86% of buyers purchased previously lived-in homes. New home purchases increased with age – the older the buyer, the more likely they would purchase a brand new home.
- The record low for new home sales was in February 2011, with only 270,000 units. This was a direct result of the financial crisis.
- “Sale by Owner” properties accounted for 11% of home sales in 2019. The typical “Sale by Owner” home sold for $200,000 compared to $280,000 for agent-assisted home sales.
- In 2018, Thursday was the best day to list a home. Properties listed on Thursday sold for $3,015 more than on Mondays, which was the worst day to list a home.
- On average, 98% of final sale prices match the original asking price of a property.
Finding a Home
- 10 weeks is the average amount of time buyers spend searching for a home. Technology has cut search time for people.
- In 2019, buyers spent 3 fewer days searching for homes than the previous year. Buyers this year are also having to see fewer homes in person and write fewer offers before successfully landing a home.
- Only 2% of home sales in 2019 could be directly attributed to newspaper advertising. The internet is the leading source of home sales.
- 50% of buyers found their homes through the internet, while 28% found them through their real estate agent.
- New leads were the top priority for real estate agents in 2017.16.5% of real estate agents had success with purchased leads.
- In 2018, 46.4% of real estate agents felt their top marketing challenge was generating enough high-quality leads. Lead generation is a constant struggle for real estate agents.
- 53.6% agents think adding more locally-focused content to their real estate website will make it more appealing. Creating more in-depth, useful content for one’s audience is the tactic industry pros think will help them the most.
- 84.6% of brokers and real estate agents use Facebook for their social media marketing efforts. Facebook has the largest user base where most agents are able to generate quality leads.
- 30% of brokers and real estate agents want to learn more about the specific housing interests (e.g., home types) of their audience.
- 49.5% of brokers and real estate agents want video marketing to be a big part of their marketing strategy. Video is the future of real estate marketing, so it doesn’t seem surprising the overwhelming majority of agents and brokers surveyed stated they plan to incorporate video into their digital strategies.
- 43.8% of real estate agents would invest in referrals if they had extra budget for marketing.
- On average, 31.5% of brokers and real estate agents plan on spending more than $400 a month on real estate marketing. Agents and brokers understand it’s more than worth it to allocate significant amounts of marketing spend toward activities and resources that can enhance their online presence.
- 93% of real estate agents prefer to communicate with their clients through text messaging or telephone, while 27% prefer to use postal mail. Postal mail is slowly, but surely, going out of style.
Home Seller Characteristics
- Baby boomers make up an estimated 43% of the home seller market. The older you are, the more likely you are to own a home and sell it.
- 34% of sellers offer some sort of incentive (closing costs, home warranty, etc.) to entice offers.
- The average home seller cashes in 29% equity in their property when they sell.
Global Rental Yields
- Rental yields in Beijing and Shanghai are extremely low, based on the Global Property Guide research in March 2018. This is partly because homes are used as investments and “stores of value”, and so there is an imbalance between homes available and renters.
- Gross rental yields for apartments in Beijing range from around 1.81% to 2.1%. In Shanghai, rental yields were a bit higher ranging from 2% to almost 3%, while apartments in Shenzhen have yields ranging from 1.73% to 1.92%.
- In Toronto, gross rental yields are between 3.9% to 5.5%. Rental yield is the amount a property investor is likely to earn through renting a property.
- In Wellington, the capital of New Zealand, rental yields on 1 and 2 bedroom houses are now around 5.5%. Apartments, and particularly smaller apartments, tend to earn more.
- In Auckland, rental yields on apartments ranged from 6.09% to 7.18% in 2019.
- In Australia, small apartments earn significantly higher rental returns than big apartments. This is particularly true in the more expensive districts.
- In recent years, even in a 120 square meter apartment in Montreal, you are likely to earn a gross rental return of over 4.5%. In this low-return era, in a low-risk country such as Canada, that is a really acceptable yield.
- Households spend 14% of their gross weekly income on housing costs. Owners with a mortgage spend 16% and renters spend 20%.
- Average weekly housing costs increased to $483 for owners with a mortgage and remained relatively stable for the other major tenure types ($53 for owners without a mortgage, $366 for renters).
- In 2017–18, the average weekly housing costs for all Australian households were $311 but vary significantly for different tenure types.
- In the past two decades, housing costs (adjusted for inflation) for major tenure and landlord types have increased by 51% for homeowners without a mortgage, 40% for homeowners with a mortgage, 52% for state or territory housing tenants, and 51% for private renters.
- In June 2020, mortgage rates hit a new record low for the fourth time in the year, with the average rate on a 30-year fixed-rate mortgage dropping to 3.13%.
- 41% of listed homes have a price reduction before they get an accepted offer. Most home buyers negotiate the terms of the deal before putting in an offer.
Real Estate Investors
- In 2018, 32% of investment property owners were renting or were planning to rent their homes as short-term vacation rentals. This number is up from 25% in 2017, respectively.
- Individual real estate investors account for 74.4% of rental properties in the United States.
- The size of the professionally managed global real estate investment market increased from $8.9 trillion in 2018 to $9.6 trillion in 2019. The growth was higher as compared to 2018 when the market grew by 4.1%.