Investing in real estate can pay back in spades for those who take the time to understand the business and develop the discipline to follow through on business plans. There is no quick and easy path to building a stable portfolio of real estate assets, and investors should remain open to emerging and overlooked opportunities such as those on the East Coast. When considering a second home or vacation home purchase, conventional wisdom suggests a tropical climate location. However, owning East Coast properties have proven profitable for many investors.
East Coast Economics and More
The housing market in 2018 remained strong although rising mortgage interest rates and tight inventories appeared to restrain market activity to some extent. These are some of the top issues that may have a significant impact on the East Coast market in 2019:
- Housing prices will continue to rise but at a slower momentum than in previous years at a forecasted rate of 2.2 percent.1
- Growth in housing prices will outpace inflation and growth in pay rates until at least 2021.2
- The Federal Reserve is expected to raise interest rates three more times in 2019 effectively raising mortgage rates, which may cause further slowdown in real estate activity.
- Housing affordability will remain an issue in the larger metro and suburban areas.
- Demand and absorption of low to mid-price real estate will remain strong.3
The savvy investor will see any slowdown in the housing market as an opportunity to re-balance their portfolio while re-evaluating current assets.
Reasons to Invest in East Coast Real Estate
Smart money will go where opportunities arise, and the East Coast is teeming with opportunities as demographics shift and baby boomers move to popular retirement destinations. With a diverse economic base, East Coast cities will remain stable in terms of employment opportunities and economic opportunities. Foreclosure homes may have been a problem as the housing market recovered, but inventory of distressed properties have enhanced market activity rather than slowed it down. Investors understand the upside potential in investing in these properties.
Those who are in search of a second home can buck traditional thinking and opt for properties in the mountains or close to the ocean in the tri-state area. These properties may turn out to be some of the best investments should you plan on managing them as rental properties. Airbnb reflects a robust demand for rentals in these areas. With stable local economies and some of the best schools in the nation, you can expect property values, especially in some of the choice neighborhoods, to continue to grow.
Best East Coast Cities for Real Estate Investments
New York
New York is expected to be a buyer’s market in 2019 due to high inventories from property owners seeking to cash in or to move to suburban areas to get more square footage for their housing dollars. However, competition for properties in the Queens borough may be higher than the rest of New York partly because price growth in this area has not really caught up with the rest of New York.
Midtown and Chelsea neighborhoods are some of the areas to explore for real estate investors, but if you want to venture a little further, look at Dumbo and Long Island City. In general, cities with good transportation connections to Manhattan will continue to see a steady interest of buyers and renters, suggesting that these are some of the focus areas for real estate investors.
New Jersey
The Garden State is viewed as the affordable housing option for Philadelphia and New York. New Jersey’s economic recovery in the post-recession era was slower compared to the rest of the Union, creating opportunities for home buyers. Some of the neighborhoods worth exploring for investment opportunities include:
- Asbury Park – The Jersey Shore is popular for house hunters seeking vacation homes with easy access to the beaches and water views.
- Weehawken – This area has become an extension of overcrowded Hoboken.
- South Orange – Inventory of new and existing housing has been tight, so expect higher prices and more competition here.
- Maplewood – Adjacent to Millburn, this town is expected to come into its own as the hunt for more affordable housing continues.
Pennsylvania
Several areas in Pennsylvania are worth looking into as real estate investment prospects. These areas include the popular neighborhoods in Philadelphia and Pittsburgh as well as the lesser known suburbs of Reading, Harrisburg, Allentown and Lancaster. These are areas steeped in history yet modern in every way. The economic prospects for this state will remain strong with long-term businesses opting to retain their operations in the state and new companies involved with pharmaceuticals, health care and high technology finding new homes in various cities.
Philadelphia is of particular concern since property values are expected to grow by 14.8 percent in 2019.4 Market activity for this area may not be conducive to flipping, but a buy-and-hold strategy will have significant yield long-term. Likewise, investors in the Pittsburgh real estate market will have the advantage of lower price points, which can lead to significant returns, depending on whether your investment strategy.
How to Get the Most out of Your Real Estate Investment
There are different ways to approach real estate investments in the East Coast. The first strategy would be to choose one that you and your family can enjoy as one of your vacation homes. These properties can be rented through a management company when you are not using it, ensuring that you can generate income to cover maintenance if not the mortgage itself. You also have the option of investing in properties to be used as long-term rentals, which would not require the same level of management as a short-term rental. In either case, make sure that the location is compatible with your plan as some areas restrict rental units.
Some investors opt for properties that are in some stage of foreclosure, accepting the risks of remediation and repairs. This works out well for those who can buy as-is with cash because financing companies may not issue rehab loans or a home mortgage for houses that do not meet local codes.
Whatever your business plan as a real estate investor, don’t overlook the East Coast market. Auction.com has some of the best opportunities for buying residential properties in New York, New Jersey and Philadelphia. Explore thousands of housing inventory, and plan on bidding soon.
Sources:
1,2 Reit Outlook and Top Real Estate Issues To Watch For in 2019
Reit – https://www.reit.com/data-research/research/nareit-research/reit-outlook-2019-top-issues-watch-real-estate-and-reits-2019
3 2019 Real Estate Forecast: What Home Buyers, Sellers and Investors Can Expect
Aly Yale – https://www.forbes.com/sites/alyyale/2018/12/06/2019-real-estate-forecast-what-home-buyers-sellers-and-investors-can-expect/#68dba53670d9
4 Philadelphia Real Estate Market 2019: Why and Where To Invest | Mashvisor
https://www.mashvisor.com/blog/philadelphia-real-estate-market-2019/
