Page 47 - Trump University Commercial Real Estate 101

Ho w to Read a Market

to have a level of education and life that they didn ’ t have. It ’ s common
for the first generation to live most of their lives in rental housing.

The second generation is more likely to own homes.
With a major wave of immigrants coming to this country for the
next 30 years, that means a wave of renters is also coming.
Keep an eye on the echo boomers. Their numbers are just starting
to be felt in housing, as they are reaching the age when they can rent
and spend. According to the United States Census Bureau, there will
be 84.9 million echo boomers by 2010, and they ’ re spenders. Investors
who cater to their tastes in real estate will do nicely.

What Drives Supply

The flip side of demand is supply. Demand creates a market, but it ’ s
lack of supply that eventually levels off a market. When demand begins
to shift and new populations come into an area, supply is usually
abundant because of the excessive building of the previous emerging
phase.
As all that supply gets absorbed, market prices begin to rise and
demand grows for goods and services. Builders, retail outlets, and offi ce
spaces expand into the area to meet that demand, and supply once
again begins to increase.
Because supply is such a critical factor for you to focus on, let ’ s
look at a few key things that infl uence it.

Land - Use Changes

Most cities and towns have zoning ordinances that restrict what you
can build and where you can build it. For instance, if an area is zoned
for industrial use, that ’ s what you are limited to. The same goes for
areas of the city that are zoned for commercial or residential use.
Some parts of a city may be zoned for both commercial and resi-
dential, and perhaps even for industrial as well. That gives you choices
about how you can improve a property.

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