With everything that has happened in China and the lingering impact of fluctuating oil prices, investors may look to real estate to hedge their bets against uncertainty -- and for good reason, as few investment vehicles can compete with real estate amid volatility.
As a result, real estate and real estate investment trusts should become see an influx of investor capital.
Certain cities, however, have positioned themselves better than others to take full advantage of the extra investor attention. In fact, there are five metropolitan areas that investors should watch this year.
They are Boston; New Orleans; Providence, R.I.; San Diego; and Sacramento, Calif.
Each of these cities has demonstrated an increased propensity for growth in more areas than one. Household formation, job sector health and low unemployment are all trending in a positive direction.
Of particular importance, however, is the growing demand to own a home in these cities, as evidenced by how fast properties are selling. On average, homes in these cities are selling 16 days faster than the national average.
Meanwhile, stocks, for the most part, have fallen short of meeting the lofty expectations set by investors when they closed the books on 2015. In January, however, disappointment turned into panic, and the market that month certainly tested the resolve of investors around the country.
The S&P 500's lost more than 5% for the first four weeks of the New Year, while the Dow Jones Industrial Average and the Nasdaq Composite declined 5.5% and 8%, respectively, during the same period.
Consequently, the performance of the stock market typically coincides with lower interest rates, a fundamental indicator that traditionally favors real estate investors. Let's just say it isn't a coincidence that the real estate sector is in a better position than the stock market at the moment.
Any time money becomes relatively cheap to borrow, investment opportunities become that much more attractive. To that point, nothing offers investors more purchasing power than "cheap" money.
I fully expect the historically low rates to continue to promote healthy activity within the housing sector. At the very least, more investors will take advantage of the rates to diversify their portfolios with real estate assets.