What Lenders Can Learn from Q1 2024 Mortgage Trends
Following the release of the Q1 2024 Mortgage Trends, much information vital to lenders has been revealed. Although the forecast itself has been described as less than favorable, it’s not all bad news. Here are a few positive takeaways and facts that can be gleaned from the report.
Knowing Your Target Industries
First, the demand for industrial space is on the rise. Warehouses are particularly in demand and with retailer inventory scheduled to reach record levels this year, industrial clients offer promising ROI.
Next, hotels and other tourism-based industries have returned to pre-pandemic levels and are expected to continue increasing as people “make up for lost time.” Some international conflicts could pose a threat but the impact is not believed to be significant.
Knowing Your Target Customers
Several niche sectors have become more prominent and present significant growth potential in the coming years. According to the 2020 Census, roughly 16% of Americans were 65 years of age or older. In 1920, that number was less than 5%. With remote medical appointments gaining in popularity, more seniors can live independently as well, which also increases the demand for housing.
Speaking of medical care, doctor’s offices and other medical locations are another high-potential asset. These are particularly valuable due to the longer leases they typically sign, making them excellent candidates for lenders.
Student housing is another potential target as the number of students living on campus, as those coming from abroad would not be able to find local off-campus housing as easily as their American counterparts.
Mezzanine debt and preferred equity lending are increasingly becoming popular options, allowing smaller lenders to get a foothold in the market. Higher interest rates and tighter liquidity combined with a smaller number of lenders available give these methods a more favorable outlook going forward than they had previously.
In summary, from the information presented in the Q1 2024 Mortgage Trends, lenders can deduce that while the overall market may be temporarily trending downward, many opportunities still exist for solid ROI.
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