Michael Nierenberg’s Real Estate Insight for 2020 and Beyond

If Michael Nierenberg had to make a list of all the topics in life that he is truly passionate about, investing would be right at the top.

After dedicating seven years of his life to Lehman Brothers, Michael Nierenberg spent 14 years at Bear Stearns where he was a big part of building the company’s adjustable-rate mortgage business, among others. Bank of America, Merrill Lynch, J.P. Morgan – he worked for them all in his career and if he learned one thing during that time, it is how to spot an important trend.

Needless to say, the real estate industry is in a constant state of flux. What is true today might not be true tomorrow, but if you can at least attempt to see the forest for the trees – to see where we’re going before we get there – you put yourself in an excellent position to capitalize on those trends before anyone else.

What is true today might not be true tomorrow, but if you can at least attempt to see the forest for the trees – to see where we’re going before we get there – you put yourself in an excellent position to capitalize on those trends before anyone else.

With that in mind, here are some of the most important real estate trends that Nierenberg believes all investors should be paying close attention to in 2020 and beyond.

Michael Nierenberg’s Real Estate Investing Trends in 2020: The Shape of Things To Come

Speaking as someone who has been an active part of this industry for many years, one of the most important real estate trends he believes that all investors should be paying attention to is also, in many ways, one of the most over-arching. While it’s absolutely true that the economy in the United States is always changing, we’re currently experiencing a greater concentration of new jobs in a small number of big markets in a way that we haven’t quite seen in some time. Because of that, there will be a greater concentration of demand for real estate in these core, strategic areas as well.

Note that Nierenberg predicts that this is one trend that shows absolutely no signs of slowing down anytime soon. Because most of the jobs under discussion fall into either the office or service categories, the businesses that provide these jobs need more support services than ever before. What we’re now seeing is that smaller markets have the potential to become much larger (relatively speaking) as a result of this increased demand, and those people will all be at the forefront of a massive influx of new real estate transactions.

Consider the fact that according to one recent study, there were 30 markets that received 60% of all new jobs created in the last five years. Those same markets are where approximately 40% of the population already lives. Nierenberg anticipates that we will soon reach a situation where housing demand grows faster than builders can meet supply, thus meaning that prices (and rents) will keep going up in these areas.

Along the same lines, he also expects a bigger gap than ever between those who own a home and those who are renting – thanks in no small part to the surge in home prices over the last few years. This is especially true in a lot of those aforementioned “big markets.”

Simply put, we’ve reached a point in this country where a single-family home isn’t necessarily an achievable goal for many people. Everybody knows that it’s always been expensive to live in a place like New York City or San Francisco. But now, places like Charlotte, Nashville, and even Columbus are earning the same reputation.

While this may be bad news for average, everyday families who are just trying to make ends meet, it’s absolutely good news for investors in rental properties in particular because rents are only going to increase. Of course – Nierenberg cautions that this is certainly something of a double-edged sword. It will become even more difficult than it already is to buy a single-family home and rent it out. The number of people who can A) afford to purchase that home in the first place, and B) who can also find a tenant who can pay the high rents that will be necessary to generate a feasible investment is getting smaller all the time. But as the old saying goes – “where there’s a will, there’s away.”

Michael Nierenberg’s final prediction has to do with a topic that all of us should actually be paying attention to whether we invest in real estate or not – the federal deficit. It’s easy to forget that right now, the current gross domestic product in the United States is roughly 2%. While nearly everyone agrees that the GDP will continue to grow as 2020 marches on, it’s also fair to say that it will slow down just the same. This is due to a wide array of different factors, like a decline in exports, uncertain domestic policies, high national debt and more.

Even something as seemingly precarious as an impending recession is when you distill it down to its bare essentials, just a problem that is to be overcome. Every problem has a solution – you just have to find it. Just as every trend is really just a real estate opportunity hiding in plain sight. You just need to be able to identify it for what it is and act on that insight in a way that others are unwilling or unable to. That’s ultimately why he believes that these real estate trends and predictions for 2020 are so important and while he will continue to pay attention to them for the foreseeable future.