UPRETS Research | How Secondary Trading Will Help Propel the Online Fractional Investment of Real Estate?
The secondary real estate market is as important as the primary market where the buyer purchases directly from the developer. Purchasing a resale property, however, has its own pros and cons that a purchaser must weigh in advance.
The secondary market reflects the investor’s desperation to exit their real estate investments in the midst of piling up residential inventory across cities and plunging sales volume. Huge discounts and negotiations are common where in today’s scenario, one features in the resale market. Experts advise home buyers to be cautious in such circumstances as an investment in resale has both advantages and disadvantages that a buyer must weigh before agreeing.
Why Are These Investor Markets Growing?
Right now, the secondary and tertiary markets are experiencing consistent and robust demand for affordable apartments. More people are interested in renting right now, especially if they are not sure they will be staying in an area for a longer time. This means the demand for multifamily housing is higher. As affordable housing is currently scarce across the country, there is strong demand for any flats offering affordable rentals. This leads to lower vacancy rates and a higher return on investment for investors in secondary and tertiary sectors. This is unlikely to change over the coming years as there is still a great demand for multifamily housing in these areas, even though there is a downturn in the economy.
The Need for Accessible Housing
There’s a huge shortage of affordable accommodation across the country today. There are only 4 million affordable homes available for the 11 million lowest-income families in the country. This is because of the low-cost rental units lost since 1990 and the steady increases in rents that have increased faster than revenues. Much of the new buildings are class-A due to construction costs , meaning the new buildings being built do not help with affordable housing needs. What this means for investors is that current housing complexes need to be restored and financed so that they can make a profit while still helping with the affordable housing crisis right now and offer homes more people can afford.
Real Estate Markets Classification
We need to define our terms before we discuss the benefits of investing in secondary (and even tertiary) real-estate markets. It is important to note that expert-by-expert definitions of particular markets vary. There are principal, gateway, secondary, and tertiary markets as a general consensus. While some attempt to fit these into population-based categories alone, aggregating information such as population growth , economic growth, occupancy rates, availability of real estate and more is far more accurate.
3 Secondary Market Factors Make Perfect Investments
· Values at Home Don’t Yo-Yo
As Business Insider points out, the markets in which you do not want to invest are those that are substantially cooling, or that continue to fluctuate wildly. With home values plunging into some major real estate markets and their surroundings, it is important to consider how home values change over time. A real estate investor looks to their property values for growth and stability regardless of strategy. Where flippers try to jump into their highest markets, passive investors seek stability and the promise of growth in turn.
There is a great deal more ambiguity to consider in markets where prices drop sharply or fluctuate rapidly. An investor needs to be underwater at last.
Secondary markets are simply less volatile — the choice they can take with fluctuating markets. Look at that Great Recession! Secondary markets were the ones that successfully weathered the crisis, while over-inflated main markets suffered the biggest hits.
· Overall Market Cost
It is only normal, in the secondary and tertiary sectors, that home prices are lower. The competition may not be as competitive as a primary market, but this comes with some benefits, the main of which is living costs. Although a turnkey real estate investor does not necessarily live in the market, they will benefit from lower maintenance costs and lower-priced assets. This helps investors to diversify their investments further and to save money.
· Net Migration
We have witnessed a dramatic change in migration trends since the Great Recession. Migration trends have accelerated overall for millennials and seniors alike. This reflects stagnating wage growth and debt crises combined with costly markets. What we’ve seen is a net out-migration in favor of secondary markets like Charlotte, Houston, Austin, and Dallas from some large and expensive primary markets.
Population growth is one of the factors contributing to the rental demand and value for real estate investors. Minding a market’s in- and out-migration trends are essential to recognizing the investment opportunities.
Wrapping Up
It is no wonder that secondary and tertiary markets are popular among buy-and-hold investors, with increased accessibility, stability, and affordability. And among all, the digital securities and its cross-industrial investigation on secondary trading will help re-brimming the real estate investment landscape.
About UPRETS:
UPRETS is a platform focused on simplifying investment in real estate by advising on and digitalizing assets and securities.
We are dedicated to providing a convenient, legally compliant and advanced real estate digital securitization platform for property developers, asset owners and investors globally.
By utilizing our UPRETS platform, real estate developers and assets owners can create digital securities for their properties, providing investors with various low-barrier, secure and convenient forms of investments.
Backed by a publicly listed real estate conglomerate (NYSE:XIN) and our award-winning, patented blockchain technology, Xbolt, we bring a network, experience and luxury assets to the platform.
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