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The Crane

What is the significance of the Brown Thrasher bird? 

Well, really nothing unless you live in Georgia. Because it is the state bird for Georgia (the best state for doing business per a CNBC recent study). 

But back in the mid-2000s, many people were associating the crane with the city, more so than the Thrasher; almost so much that the Thrasher was looking to be de-throned by the city. 

But all this changed abruptly. No, not because the Thrasher hockey team was shipped out of the state. 

Rather, it was because the people talking about the crane as the state bird were associated with real estate. And the reason for the crane was not because of the bird being seeing in the state, but because of all the machinery that was in the Atlanta skyline. Construction cranes were popping up like they were going out of style. 

But as the real estate boom unraveled, these cranes began to fall from the sky. 

The crane uprising 

Recently, the crane has risen again within the Atlanta skyline. And some wonder if this is yet again another boom on the horizon. 

If we were judging just based on the growth rate of the numbers of cranes in the sky, then maybe the argument would be valid. But real estate is more than just the commercial space. 

But for me, it has definitely made me a little cautious because the cranes are developing a bunch of living quarters. We are talking about apartment complexes with thousands of units. The worry comes from how those are going to be filled and whether or not the construction is in reaction to what has happened as opposed to what the upcoming trend may be. 

Despite this concern within the commercial construction area, it doesn’t seem to have spilled over into residential real estate… yet. 

Existing and pending home sales are trending higher for the year. And home prices continue to be in an uptrend. Mortgage rates are also falling this year, which provides opportunities for new home buyers at lower costs. 

The uplifting trend 

The recent positive though may not always be able to be seen in data. 

Younger people are beginning to test the home buying markets and that is a positive longer term trend. The generation that has been burned by two stock market crashes and a less-than-welcoming employment market are now talking about and acting on purchasing homes.

 These were the people that continued to push rental rates higher. And moved back home in order to save and pay down student loan debt. 

As of recently, these individuals have brought the words “home purchase” back into their vocabulary. The impact may take a little while to set in as home buying season nears an end. And many of these individuals are just starting to save for that purchase they are now talking about. 

But the future of the sector really stands on this generation’s eagerness to own versus rent. 

From the aspect of investing in real estate within the equity markets, it has paid off handsomely. VNQ, the Vanguard REIT index, is up nearly 20% for the year. The Dow and S&P 500 are up 0.52% and 5.77%, respectively. 

So, as we head towards the end of the year, real estate seems to be poised for a longer term uptrend despite the crane rising again in Atlanta. 

With the young generation finally thinking about home buying, the future of real estate has a little extra support. From an investment standpoint though, taking profits from a space that has dominated so far this year may not be a bad idea.

(All data used within The Capital Course was provided by Ned Davis Research)


 

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