This recovery is typically further fueled by government intervention in the form of lower interest rates, which is exactly what happened because we’ve been experiencing near historical lows for the past decade in terms of interest rates. And this shortens the impact and duration of the recession and speeds up the recovery as it has. And with increasing demand and lower investment costs, companies expand their businesses. They hire more people, they open more headquarters, they open more restaurants, open more stores.
They need more office space, they buy more equipment and all of that. They end up adding more jobs, which drives demand for residential homes, driving up rents and property values, especially in markets that have seen economic growth, which seems to be the case for most markets right now.
During the recovery, we will see vacancies start to drop. We’re not going to see a lot of new construction yet.
During the recovery, we are starting to see rents go up. We’re starting to see property values first. Stop going down, and then start to recover and start to turn back around. And as that pace begins to keep up, as the existing inventory that was there, all the empty houses, all the new homes that weren’t sold before, all of the existing homes that were on the market that were trying to be sold but took a long time.
the economics, the profits from investing, from investing real estate starts to look a little bit better.
There are going to be more and more investors that now are going to come back and there are more companies that are going to start to build. More developers will start to have projects where they want to build new buildings because now the economics are starting to look good enough that they can make those kinds of investments again. And then what happens then is we enter the expansion phase where we start to see a lot more new construction.