For more than a decade, real estate investors benefited from a powerful tailwind: rising prices. In many markets, appreciation did the heavy lifting. Buying and holding real estate felt almost effortless. Today, the environment is different.
A growing number of respected market observers—including Bruce Norris—have raised the possibility that the coming years could deliver lower or muted capital gains compared to the past cycle. Not a collapse—but a prolonged period where appreciation is no longer guaranteed.
For investors, that shift matters.
Why Capital Gains May Be Harder to Rely On
Several structural forces are reshaping the market:
- Higher interest rates are reducing affordability and buyer demand
- Price-to-income ratios remain historically elevated
- Debt levels across households and government are high
- Demographic and migration trends are evolving
Historically, when these factors converge, markets often experience longer periods of flat or modest price growth rather than rapid appreciation. In that type of environment, strategies built primarily on future price gains carry more risk.
The Challenge of Buying Real Estate Today
Buying property in a low-appreciation environment requires precision:
- Cash flow margins are often thin
- Holding periods can extend unexpectedly
- Exit pricing becomes less predictable
- Small market shifts can materially impact returns
When appreciation slows, execution risk increases. That is why many investors are reconsidering how they participate in real estate.
Why Some Investors Are Choosing Trust Deeds
Rather than purchasing property outright, many investors are allocating capital to trust deeds (private real estate lending). Trust deed investors are not dependent on appreciation. Instead, they earn returns through contractual interest payments, secured by real property.
Key benefits include:
- Predictable income streams
- Priority lien position on the property
- Shorter investment durations
- No tenant or property management responsibilities
In an uncertain appreciation environment, earning yield while maintaining downside protection can be an attractive alternative.
Closing Perspective
Real estate remains a powerful asset class—but the strategy must match the cycle. When capital gains are uncertain, many investors focus less on speculation and more on income, structure, and risk management.
