Real estate means capital investment to improve the structure of roads, infrastructure and fixtures. Real estate investment includes land, residential investment, commercial and industrial investment. This SWOT analysis is about top real estate agent investment in the US. It will glimpse the US industry picture for recent fluctuations.
US real estate investment has some strong points, and its strengths count for complete market information, about prevailing industrial trends, knowledge, output and key industry indicators such as price, employment and prices of raw material, infrastructure etc. The growth and profitability of real estate investment security are accompanied by interest rate. Low-interest rates are attractive, while mortgage loans increase during the low-interest time, which is a strength for real estate. Current year’s revenue of real estate industry is $223.8 billion that is attributable to insiders, mutual funds and institutional investors. Another strength for this industry is the low-level concentration that can offer more competitive advantages in the future. The other strengths of real estate investment are a less risky investment and improved value over time. Macro-economic factors can devalue the currency so inflation hedge can be a strength for this industry. Superior debt and financial management services are also a success factor for the industry that acts as an advantage. Capital investment level is high, that is an added advantage for the industry.
General economic cycles is a weakness because, in this wat GDP growth rate, unemployment and investment trends vary that hurt real estate investment. Moderate level of technological change in accounting methods, bookkeeping and other operations can be a weakness because real estate investment needs a full technological innovation to enhance profitability. Volatile revenue is also a weakness because general economic conditions contribute to declining revenue and growth, such as COVID-19 pandemic in recent times that has slowed down every business. Long term interest rates are a weakness because the high-interest rate may lower the relative return of real estate securities.
Low concentration of market share is a great future opportunity for real estate investment. More capitalized firms and their interest in purchasing real estate investment is a big opportunity in the industry. Demand for housing in the US will increase in 2020 due to homelessness and government announced policies, so it is a good future opportunity for the industry to get an increase in profitability. Globalization level is increasing for this industry that can increase the public trust in the industry, and international operations will increase exposure. There is a low threat of entry because moderate barriers prevail for new entrants, firms have to pay dividends on taxable income, and therefore some firms find it less feasible to enter the industry. High level of innovation and disruption of technology is making it a lucrative opportunity for the future.
The low subprime mortgage crisis is a big threat to real estate investment. Depreciation is another threat to the industry because it unfairly reduces the income of real estate assets. The competition in real estate investment US is increasing; both internal and external competition can be a threat to the industry. Management of real estate needs personal interaction and high expertise; companies investing are required to have a full grasp on techniques, if not adequate, it may be a threat. The real estate investment cannot hold more than 10.0% value of securities that relates to non-real estate corporation. Another threat is the low level of industry assistance through various resources. A technological provision in different policies and less improved structure can be harmful to future development. Less support to other related industries like transportation and the raw material is a threat to the industry because globalization provides increased access to all industries.
SWOT analysis presents an overall picture of an industry in terms of strengths and weaknesses and possible consideration of threats that should be handled. It is recommended that in US real estate investment should be further provided significant opportunities to grow because it is an industry that has substantial potential to lift most of the related industries, so it can support the economy in a better way. Lending money process, capitalization and mortgage should be made easy for the public so that they can get the benefit of real estate investment. Asset losses, inefficiency, high costs and less experienced people should be tackled rationally to improve the productivity of this industry.