Real Estate "Appreciation" is over.

Appreciation is when something increases in value without any significant “work,” like improvements. Take your grandmother’s single-family home, for example. Sure, there may have been repairs or minor renovations, but most of the value likely came from the “market” appreciating.

If the market is the driving factor, the real question is: what can you buy today that will still be in demand 5, 10, or even 20 years from now?

Commercial real estate remains a highly sought-after asset class, but much of its value hinges on the cost of borrowing money. Most investors rely on leverage (loans) to maximize profits, and the timeless strategy of using “Other People’s Money” (OPM) remains a cornerstone of real estate investing.

Where does the market go from here? No one knows. A new generation of real estate investors has taken the torch, navigating a market shaped by aggressive bank lending in 2020 through 2022. The full effects of those decisions have yet to unravel.

Here’s the challenge: buyers and sellers fundamentally disagree on values, and even if interest rates drop, that gap may persist. Why? Many properties purchased between 2020 and 2023 were arguably overvalued due to historically low interest rates. But those loans will mature soon, and with little to no rent growth, the pressure will mount.

How hard can you squeeze? The American economy has proven far more resilient than experts predicted.

Why has rent growth stagnated? Since our grandparents’ era, developers have been building at record rates, creating more inventory, increasing competition, and holding rental rates flat.

The buyers focused on cash flow will continue to dominate. We’ve already seen banking reforms, and banks will only grow more conservative.

The New Generation of Real Estate Ownership has just begun.

And the verdict isn’t out yet.

Where do you think we go from here? Comment below!

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