dramatically? There have been enough public announce - ments from major companies to know it will never go away entirely. As long as remote work remains viable, real estate investors should have more opportunities in secondary and tertiary markets as more buyers look to escape high-dollar urban centers and jump into home - ownership. Biden announced during his presidential campaign that real estate would not go untouched under his administra - tion. He announced early potential changes in real estate tax benefits as well as focusing on making ownership more accessible. Biden’s scrutiny of the 1031 exchange is the most con - cerning for real estate investors. Deferral of capital gains via the 1031 exchange is one of the industry’s favorite tax strategies. Biden is considering ending benefits for those with incomes over $400,000. Some speculate this would drastically slow real estate development, but it’s not clear how drastically it would impact Main Street investors. But, for investors that meet the $400,000 income thresh - old, the change could arrive as the US and many states are forced to increase income tax rates to plug badly beaten budgets. Biden is also in favor of two other initiatives that should have real estate investors ecstatic. Millennials have postponed real estate ownership, with industry experts blaming college debt and saving for a down payment as to why they are late to the ownership game. If Biden comes through with a combination of college debt forgiveness on top of a $15,000 first-time tax credit, it could ignite a new wave of hungry buyers. They would land in a market that is short on inventory along with life-time low-interest rates. What will that do for prices? We believe that will push prices higher, and affordability lower. Interviewing experienced real estate investors around the country, one word that continually comes up is “cau - tious.” For those around a few cycles, the simple mission is to leave yourself a lifeline. Not buying into the hype, closing solid deals, and focusing on multiple exit strat - egies is a wise approach in 2021 as we deal with a few unknowns. With so many struggling, distressed sales may rise in 2021. However, with foreclosure and eviction moratoria, these will happen either as traditional listings or off-mar- ket sales, rather than on the courthouse steps. So, investors will continue to thrive in the world of off-market deals as we have for the last several years. •
Like many other suburbs outside of large urban cen - ters, Long Island has seen migration from city dwellers looking for more space. Home is now a place to live, work, play, and educate. Clean, vacant inventory is selling quickly, and flippers have the right inventory to show qualified buyers that are serious about planting roots. Even if new buyers are forced to return to a hybrid work model where they need to return to work a few days per week, homeownership will likely outweigh the inconve - nience. They will spend less time in traffic every week, have more money to spend, and enjoy a better quality of life with that newfound time and savings. Some may even risk mass transit inconvenience if they only have to com - mute a handful of times per week. THINGS TOWATCH THAT COULD IMPACT REAL ESTATE As vaccines roll out and hopefully see the pandemic subside, investors will watch how and where people work. Will businesses continue the work-from-home move - ment, offer hybrid models, or scale back remote work
Aaron Norris is VP of Market Insights with PropertyRadar. He writes and speaks nationally on data, trends, and technology. He’s a licensed real estate and mortgage broker and has been in the industry since 2005.
80 | think realty magazine :: march 2021
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