What is a Good Economy for a Real Estate Investor?

Recently I was reading through Dave Paladino's blog and I came across a post that really caught my eye. It correlated with everything I've been reading about what a great buyer's market we are in and how the able-bodied should seriously consider investing in some form of real estate.

Dave wrote this post on Sept. 20, 2009, which is eerie because it sounds as if he's describing the Omaha we know today. A good economy for real estate investors, he suggested, looks different than a good economy for the rest of the business world:

1. High interest rate environment. Landlords compete with house payments, so the higher rates our competitors charge, the more we can also charge in rents.
2. Tight lending standards. If it is hard for people to borrow money, they are more likely to rent.
3. Less new construction of apartments. All business is supply and demand. The lower the supply, no matter how small, the less competition you have.
4. Big employment growth/low unemployment. [This wasn't in his original posting, but just to put Omaha's standing in this area into perspective, our unemployment rate is 4.7% and the U.S. average is 9.1%. Although our job growth, according to Sperling's Best Place is .09% - not very high.]
5. Net population increase. The more people looking to rent, the better. [According to the Greater Omaha Economic Development Partnership, Omaha has grown 12.8% in the last ten years and a 5.5% growth is projected for the next five years.]
6. High foreclosure rate. People have to live somewhere. It's not as if the demand for housing goes away.
7. Families living separately. This one is hard to measure, but it is really good for our business. Say a family has five adult children and they all live at home. It is definitely better for property owners if all these people live in separate units.