Whether owned or a rental, having the right home is more than just a necessity. For many, buying a home is an important milestone in life and a way to build equity over time. In a household’s portfolio, housing is often the most valuable asset. The housing sector concentrates a significant portion of global wealth. Though the residential real estate market differs widely in different countries and regions worldwide, since the coronavirus pandemic, there has been an overall trend of growing house prices. This trend has also affected rental housing and has increased the popularity of residential real estate among investors. Multifamily real estate, also known as build to rent housing, has become one of the biggest investment asset classes. Renting is very popular in certain countries and cities. For many, the reason they rent is because of affordability and job security. Though this might be the case, renting is often a lifestyle choice that allows more flexibility.
Median sales price of a luxury condo in Manhattan, NY
Employment security, the cost of borrowing, and the availability of homes for sale are some of the major factors that boost or slow down the growth of the housing market. During the coronavirus pandemic, many aspiring homeowners in the U.S. and around the world capitalized on the record-low mortgage rates and bought a home, leading to a spike in residential real estate transactions in 2020. As mortgage rates rise due to inflation and lower inventory, the market has shown signs of cooling down.
Owning an apartment in some of Europe’s biggest and most prosperous cities can get expensive. While the availability is limited, perpetual demand drives prices up. Buying a 75 square meter apartment in London could cost up to 14,000 euros per square meter – approximately twice as much as in Copenhagen and five times as much as in Warsaw.
Though homeownership has been traditionally seen as a cornerstone of the American Dream, Millennials are more hesitant when it comes to buying a home compared to older generations. Since 2018, the share of Millennials who expect to always rent has gradually increased. One of the major factors contributing to this trend is that homes have become substantially less affordable in recent years, meaning that many Americans have given up on homeownership.
One of the ways to invest in real estate is through Real Estate Investment Trusts (REITs). REITs are public companies that own and lease income generating real estate. Instead of buying the properties, investors buy shares and receive dividends in return. In Canada, the leading REIT in 2022, CDN Apartment UN, had a market cap of about 9.5 billion U.S. dollars. The company is an apartment properties investment trust that specializes in midtier and luxury multiunit rental properties.
Residential real estate is real estate that has been developed for living purposes. Housing comes in different shapes and sizes and varies across countries and regions. It includes apartments and multi-family housing more common for dense urban areas and city centers, as well as single-family or semi-detached housing typical for areas with predominantly residential use. While student housing, coliving, and build-to-rent properties also have a residential aspect, they are often developed and operated primarily for commercial purposes which classes them as commercial real estate. Further facts on the supply spectrum of the market can be found in our Construction section.