In our current economic scenario is investing in real estate still a safe thing to do?
A conversation with Claude by Anthropic (AI) interviewed and edited by Cliff Hockley
Real estate investment carries both risks and opportunities in the current environment. Here’s a breakdown of both:
Factors working IN favor of real estate right now:
Inflation hedge — Real assets tend to hold value better than cash during inflationary periods
Rental demand — Housing shortages in many markets keep rental income relatively stable
Tangible asset — Unlike stocks, real estate has intrinsic utility value
Leverage — You can control a large asset with a relatively small down payment
Market Place Uncertainty – Could encourage longer term holds as loan balances shrink
Factors working AGAINST real estate right now:
High interest rates — Elevated mortgage rates increase borrowing costs significantly, compressing returns
Geopolitical uncertainty — Trade tensions, tariffs, and economic slowdowns can depress property values in certain markets
Liquidity risk — Real estate is illiquid; you can’t quickly exit if conditions worsen
Correction risk — Some markets that surged post-2020 are still correcting
Vacancy risk — Economic downturns can reduce tenant quality and increase vacancies
It largely depends on:
Location — Some markets (e.g., secondary cities, areas with job growth) are more resilient than others
Property type — Residential, commercial, industrial, and retail carry very different risk profiles right now (commercial/office is under particular stress)
Your time horizon rewards patience; short-term flipping is riskier in volatile markets
Financing structure, leverage — Cash buyers and low leverage owners vs. heavily leveraged buyers face very different risk levels
Local supply/demand — Markets with chronic housing undersupply tend to be more stable
General guidance: Real estate can still be a reasonable long-term investment, but the current environment favors conservative approaches— strong cash flow properties, manageable leverage, and markets with genuine demand fundamentals rather than speculation. Especially now during the Iran conflict, gold and silver have lost values, stock markets have retreated making real estate investments more interesting. Watch Walker and Dunlop 3/25/26 seminar for the absolutely most current information on what’s happening in finance and real estate markets.
Does our currently shrinking population have an impact on real estate investing?
Demographics are one of the most powerful long-term drivers of real estate values.
Here are the key demographic forces shaping real estate investment right now:
Here’s how each force plays out in practice:
Millennials born between 1981 and 1996 (the biggest tailwind) — The largest living generation is squarely in prime home-buying years. Pent-up demand from delayed household formation (student debt, high prices) is still feeding through. This creates durable demand for starter homes and suburban properties.
Baby Boomers 1946 to 1964 (a supply wildcard) — Many are “aging in place” rather than selling, which is locking up inventory and keeping prices high. When they do eventually downsize or pass away over the next 10–20 years, it could release a significant wave of supply— a risk for long-term investors in retirement-heavy markets.
Gen Z 1997 to 2012 (the rental engine) — Largely priced out of buying, they’re driving strong rental demand. Multifamily apartments and build-to-rent (BTR) housing are direct beneficiaries.
Migration patterns (where to look) — Domestic migration continues toward lower-tax, lower-cost Sun Belt states — Texas, Florida, Tennessee, Arizona, the Carolinas. These markets have stronger demographic tailwinds than slow-growth or shrinking population areas (parts of the Midwest and Northeast).
Key risk to watch — several fast-growing metros (Austin, Phoenix, parts of Florida) over-built in 2021–2023 and are now experiencing rent softness and price corrections, showing that demographic tailwinds don’t override local supply surges.
Bottom line for investors: Demographic fundamentals remain broadly supportive of real estate — especially rental housing in high-migration markets — but location selection matters enormously. Population decline in a market is a serious red flag; population growth alone isn’t sufficient if supply is outpacing it.
How do these population shifts affect Commercial real estate?
Population shifts are reshaping commercial real estate (CRE) in dramatic and uneven ways — some sectors are being gutted, others are booming. Here’s the breakdown:
Here’s the deeper picture for each zone:
The crisis sectors — Office is the most distressed major asset class in a generation. Remote and hybrid work has hollowed out central business districts, with vacancy rates in cities like San Francisco and Chicago exceeding 25–30%. Population leaving coastal urban cores compounds this: fewer workers, fewer companies needing space. Traditional retail continues its long `1`. structural decline as e-commerce absorbs spending — malls and strip centers anchored by department stores are particularly exposed. In the US roughly 15 % of retail transactions happen online as compared to approximately 50% in China and about 30 -36% in Great Britain.
The transitioning sectors — Medical office is a quiet bright spot, driven directly by the aging Boomer cohort needing more healthcare access. Hospitality is bifurcated: leisure travel (driven by Millennial and Gen Z spending on experiences) is healthy, but business travel remains structurally lower than pre-2020. The most interesting dynamic here is office-to-residential conversion — cities and developers are trying to repurpose failed offices into housing, though the economics are difficult and building structures don’t always cooperate.
The benefiting sectors — Industrial and logistics is the standout winner of the past decade, powered by e-commerce infrastructure needs and the shift in population toward suburban and exurban areas requiring more last-mile delivery networks. Data centers are booming from AI and cloud demand, largely independent of population geography.
Senior housing is positioned for a structural multi-decade boom as 70+ million Boomers age into needing assisted living and memory care — undersupply in this segment is significant. Self- storage benefits quietly from migration (people moving store belongings) and Boomers downsizing from large family homes.
Is there a Midwest / Northeast rebound as the tax free and southern states benefit from economic flight?
The answer is a clear and well-documented yes — and it’s happening right now with real momentum. The data is quite compelling.
Here’s what the data shows is actually driving this right now:
The Sun Belt correction is real. After overbuilding aggressively in the post-COVID years through 2024, homebuilders in Sun Belt states — particularly Florida and Texas — are sitting on an oversupply of standing inventory, and the 2025 pullback in new construction is a direct correction to that imbalance. (HousingWire) Meanwhile, several Sun Belt metros recorded flat or slightly negative rent growth as elevated supply weighed on performance, while many Midwest and Northeast markets posted steady gains supported by limited new development and tighter housing inventory. (Viking Capital)
The Northeast and Midwest are being called “refuge markets.” Realtor.com’s chief economist Danielle Hale described these top 2026 markets as offering better value than nearby high-cost hubs, yet with steady demand and persistent inventory shortages keeping prices moving upward. (Scotsman Guide) The inventory shortage is severe — Hartford’s available active listings in late 2025 were still 74% below pre-pandemic figures, and the average gap across the top 10 Northeast/Midwest markets is a 46% deficit compared to just 11.7% nationally. (Norada Real Estate)
Out-of-state capital is flowing in. In Q3 2025, 40% of listing views in Realtor.com’s top 10 markets for 2026 originated from people living outside those areas, often from expensive hubs like New York, Boston, and Washington DC — up from 31% before the 2022 mortgage rate spike. (Scotsman Guide)
The Midwest multifamily story is especially strong. The Midwest was the only region apart from the South with a net gain in interested movers in 2025, posting a greater than 3% gap between inbound and outbound migration interest, with Wisconsin seeing a 79% increase in inbound move searches and Minnesota jumping from #40 to #14 in migration interest in a single year. (Evernest) For commercial investors, the Midwest boasted an average cap rate of 6.0% in early 2024, the highest among all US regions, while its construction pipeline stands at just 3.4% of inventory — less than half the national average. (Cushman & Wakefield)
Important caveats though:
The bounce-back is real but uneven. It’s concentrated in specific cities — Hartford, Providence, Rochester, Buffalo, Indianapolis, Columbus, Kansas City — not across the entire Northeast or Midwest uniformly. Shrinking cities in parks of upstate New York for example are still struggling. And the hottest rental markets remain in fast-growing, affordable metro areas with strong job growth and limited housing supply Concreit — affordability alone isn’t enough if there’s no employment base. The cities winning have both.
The structural tailwind here is durable: as long as Sun Belt costs stay elevated and coastal cities remain unaffordable, the pressure valve pointing toward Midwest and secondary Northeast cities will keep releasing.
Summary
Real estate investing in the United States is still attractive, but you have to understand each marketplace there are all rather individualistic. Even though there has been capital flight to the southern states, particularly the income tax free states, some Midwest and Northeastern cities are able to compete with lower housing costs. This of course affects all levels of real estate investment. Successful real estate markets are concentrated in specific cities — Hartford, Providence, Rochester, Buffalo, Indianapolis, Columbus, Kansas City — not across the entire Northeast or Midwest uniformly. The hottest rental markets remain in fast-growing, affordable metro areas with strong job growth and limited housing supply (Concreit) — affordability alone isn’t enough if there’s no employment base. The cities winning have both.
Examples for the following cities will show up separately on different blog posts.
Detroit, Chicago, Portland (Maine), Jersey City
Clifford A. Hockley is Principal Broker at SVN | Bluestone, as well as the managing member of Cliff Hockley Real Estate Consulting, LLC. As a Certified Property Manager & Designated Managing Broker, Cliff has 42 years of experience in the brokerage and management of Real Estate companies. Bluestone and Hockley Real Estate Services managed condominium associations, multi-family, and commercial properties in the greater Portland area. He was focused on running the company and involved with investment property brokerage. He worked with financial institutions, governmental agencies, private investors, and not for profit organizations. He also has vast knowledge in budgeting, organizational management, and building structures. His previous experience includes over five years in accounting, production supervision for a manufacturing company, and work for state agencies in California.
Cliff grew Bluestone and Hockley Real Estate Services into a 100 employee company that managed over 2 billion dollars of real estate assets before he sold the company in 2021. He also supervised a sales team of over 15 real estate brokers for over 35 years. His monthly newsletter, QuickFacts has over 2,300 subscribers. He has been involved in numerous real estate transactions that include industrial, retail, office, and multifamily properties. Cliff has also written a book called “Successful Real Estate Investing; Invest Wisely, Avoid Costly Mistakes and Make Money” published by Morgan James Publishing in 2019.
Cliff has successfully coached real estate investors and CEOs located throughout the United States since 2015. He has acted as a sounding board to help untangle knotty issues that need an experienced outside opinion. He guides leaders who find it is “lonely at the top” and need an experienced hand to help set a strategic direction, sort out operational problems and want to talk through challenging business decisions.
He has served as an adjunct professor at Portland State University from 2028 – 2021, teaching classes in: Intro to Real Estate, Basic Real Estate Finance, Property Management as well as Real Estate Investment Fundamentals. He has instructed hundreds of students and believes that substantial preparation and active student engagement are crucial for learning and appreciating the field of real estate. Students appreciate his candor and real-world experience.
Among his many civic activities, Cliff served on the Board of Directors for the Portland Chapter of the Institute of Real Estate Management (IREM) and the Rental Housing Alliance of Oregon. In 2014 he was recognized by IREM as board member of the year, and in 2015 he earned an achievement award in brokerage from SVN International. In the years 2000 & 2003, he was recognized by IREM as Certified Property Manager of the Year.
