Sustainability - But Not If It Costs More?

There are enough challenges for real estate investors, developers, and investors these days. Along comes another one which would, at the start, impact some municipalities in Missouri, but we all know how ideas spread.

Some municipalities have taken careful steps over the past few years to encourage sustainable real estate. Columbia MO added a building code six years ago to include more energy efficient elements to real estate developments including windows, water heaters, and insulation. The code also added tougher requirements for ventilation. This type of action is becoming more common throughout the country.

Real estate developers and contractors know better than anyone how supply chain concerns and rising material costs are causing construction delays, cancellations, and rising costs. The Missouri House (political - not a residence) is looking to reduce costs for construction. So what did they do?

Earlier this week they approved Bill 839 which could be going to the Senate within the next 30 days. This Bill would, believe it or not, prevent municipalities within Missouri from having green or sustainable standards in building codes IF they would increase the cost of a building.

Note our example of Columbia which has rules in place to encourage sustainable building. Consequently, if Bill 839 passes, Missouri would wind up behind other states (that do not pass anything similar) in terms of energy efficiency. This measure would impact tenants and homeowners in the long run.

Some developers and investors take advantage of current tax incentives and purchase rebates by going with energy efficient products such as new appliances. If they can’t find them in Missouri, they may go elsewhere. If other states were to adopt this, the reduction in energy efficient buildings could have a long-term negative impact.

I’m sure there are investors and developers looking at opportunities in Missouri right now who are not aware of this situation. It’s a situation which could become a reality within a few weeks. Regardless of what you or I think about Bill 839, it adds consideration toward potential investing or selling scenarios. It also adds to the reason you need to have a research person or team to keep you aware of important information not specific to a property.

 

  

 

https://www.columbiamissourian.com/news/local/missouri-bill-could-force-columbia-to-abandon-sustainable-building-code-requirements/article_094b34f6-f17a-11ef-a74a-f7178590981d.html

 

 

 

How Much of a Factor Should "Year Over Year" Be?

As involved as I am with performing and examining research related to residential and commercial real estate, I also know not to overdo it with some of the published information. Year vs. year trends is one area I think is overused, especially on the residential real estate side. I have said over the past 30 years that I have yet to meet a home buyer who purchased based on monthly or yearly local market trends. The individual or family situation, location, and price play a much bigger role than how many people bought homes months or years ago. 

The article below compares residential inventory and home sales for February over the past eight years in an attempt to establish a trend. I’m not seeing the importance of considering this data. 

Here are some of my reasons. The year 2020 had the distinction of being the year of the pandemic, which killed or changed thousands of deals. As things cleared up in 2021 and consumers adjusted to changes like working from home, what took place in 2020 had a strong influence on 2021. In 2024, property owners in parts of Florida and North Carolina suffered significant damage from two major hurricanes. Over the next few months we will see how Southern California real estate is impacted (well beyond just the month of February) from the major wildfires of early 2025.

At the same time, mortgage rates have varied from low to higher than recent years, which has shown an impact on real estate transactions. Playing the waiting game often means that “deals” available while rates are high won’t still be there if and when rates drop.

What it all means is that many conditions may change significantly by February 2026, and the reasons to buy, hold, or sell real estate could have nothing to do with current and recent trends.

How you interpret research, statistics, and trends can play an important role in decisions and transactions you and your team are considering or implementing. Although having research in your favor is extremely beneficial, it needs to be the right research.

 

 

 

https://www.resiclubanalytics.com/p/housing-market-inventory-state-update-march-2025

 

 

 

How Will Office Space To Apartment Space Impact Housing?

It’s interesting to note how big cities are addressing their housing problems, but at this point in time there is no other situation like the Los Angeles area. The article below tells us about converting some of the unused office space to apartments. Meanwhile, as noted previously in this space, legislation took effect at the start of 2025 for California to allow ADUs (Additional Dwelling Unit) which includes Los Angeles County. These actions are each independent of the results of the recent wildfires which destroyed hundreds of houses and forced thousands of tenants to vacate and find other housing. 

 

Other states such as Washington have recently enabled ADUs to encourage more housing becoming available in dense areas whether office space is being converted or not. 

There are no assurances that having two different means of creating more housing in the Los Angeles area will bring an increase in rental tenants or help to combat rising costs. Additional competition for tenants and buyers might be a good thing, especially for potential tenants. 

One consequence of all this is how real estate brokers, lenders, contractors, and investors need to be aware of how all of this is shaping up for the months and years to come. Anticipating opportunities is an important part of the strategy, whether for the job or possible results of a short-term or long-term investment.

Meanwhile, we have an increase in the number of people moving out of California. It’s to the point that California is now among the states “losing” the most residents, with housing prices being a big reason why. Creating more housing may be a solution, but it may not happen in time to keep thousands more current residents in place. Newly created housing, whether through new construction or conversion, may or may not be priced within reach for “new” residents or to keep displaced residents in California.

How this plays out in California, especially in the Los Angeles area, could impact other major cities both inside and outside of California over the next few years. All of this is still another reason to continue to research market trends along with pending legislation and local zoning changes. I’m constantly reminding my clients and trusted connections about making sure they know “more” than whoever they are negotiating against about possible advantages.

Having a research person or team on your side is even more important than it was a year ago. Let’s connect!

 

 

 

https://www.rentcafe.com/blog/rental-market/market-snapshots/adaptive-reuse-office-to-apartments-2025/