5 Trends to Watch

Here are five market trends to monitor this month, in the context of your real estate investing portfolio:

1. The Election Happened

So, the election results are in and many investors are evaluating what a new administration might mean for markets and their portfolios. Elections always bring an element of volatility, but this time, the stakes feel particularly high. With pressing issues like inflation, interest rates, and geopolitical uncertainty top-of-mind, many investors are keenly aware that shifts in leadership could have tangible impacts on fiscal policy, regulation, and industry focus. Sectors like clean energy, big tech, and healthcare are some areas where policy decisions can directly affect growth trajectories and investment outcomes.

The focus now will be on interpreting early policy signals and positioning for what’s next. If the new administration leans into infrastructure spending or clean energy incentives, for example, this could signal a boost for renewables, EV infrastructure, or even AI applications in energy efficiency. Meanwhile, a focus on interest rates and inflation control could impact financing costs across the board, especially for those looking to expand or leverage real estate investments. Investors may want to adopt a cautiously optimistic approach, leveraging tech tools to monitor policy shifts and sector-specific impacts in real time, while staying nimble and diversified to capture opportunities and hedge against potential risks.

2. Million Dollar Market

A recent study by Realtor.com identified ten affordable U.S. cities that are likely to become million-dollar markets within the next decade. Cities like Boise City, ID and Salt Lake City, UT are experiencing high buyer demand and limited inventory, which drives up housing prices. For retail CRE investors, this trend indicates that certain mid-size markets may see substantial growth in household wealth and consumer spending capacity over the long term. As home values rise, homeowners in these markets may experience increased equity, translating to higher discretionary spending in local retail stores.

These markets may see a shift toward upscale retail and lifestyle amenities as the population grows wealthier, providing opportunities for investors to attract high-end tenants or develop mixed-use properties that cater to more affluent consumers. By focusing on investments in these markets, CRE investors could benefit from both property appreciation and consistent demand for services aligned with rising local incomes.

3. All the Single Tenants

The transformation of Brooklyn’s historic Domino Sugar Factory into a high-end office space is a testament to the challenges of large office redevelopments in the post-pandemic era. For self-directed CRE investors, tenant demand remains very important? in office investments, especially in markets where hybrid work is popular. High vacancy rates in repurposed office spaces suggest that investors should carefully assess tenant interest and the demand for premium office features before committing to redevelopment projects.

Additionally, this example illustrates the risks of investing in single-tenant-dependent CRE projects, particularly in the office sector. Self-directed investors may find greater stability by focusing on multi-tenant properties or office assets with a mix of tenants in growing suburban markets. Moreover, as high-profile, urban office spaces struggle with vacancy, smaller offices with flexible layouts in well-connected suburban locations may offer self-directed investors more secure rental income streams amid uncertain demand for traditional office spaces.

4. Lending Rebound

U.S. banks, holding more than $3 trillion in CRE mortgage debt, are expected to increase lending activities in 2025 as interest rates stabilize. For self-directed CRE investors, this lending rebound could present favorable financing conditions for acquisitions or refinancing existing assets. Access to financing with more favorable terms may enable investors to lock in attractive deals, expand their portfolios, and take advantage of the CRE market’s anticipated recovery.

As the potential lending surge demonstrates, timing is important in real estate investing. Self-directed investors should monitor interest rate trends and plan their financing strategies to capitalize on potential rate reductions. With access to bank financing likely to improve, this is an opportune time for investors to analyze properties with high-growth potential. Considering properties that require refinancing by 2025 could also be advantageous, allowing investors to secure better terms and enhance their portfolios’ long-term financial outlook.

5. Texas Rising

Dallas-Fort Worth (DFW) has been named the top U.S. metropolitan area for CRE investment and development in 2025, thanks to its economic growth and post-pandemic recovery. For self-directed CRE investors, DFW’s designation as a hot investment area highlights the advantages of investing in high-growth markets. Strong job growth, population increases, and infrastructure development all contribute to the region’s stability and demand across asset classes, from industrial and retail to multifamily.

With the rise in investor interest, property values in DFW are likely to continue appreciating. Self-directed investors can benefit by seeking out value-add properties that can capture market appreciation or by targeting well-located assets in the early stages of growth. Investing in established and high-demand metros like DFW can provide reliable income potential and portfolio diversification if they seek to benefit from long-term regional growth trends.