If you have any plans of investing in the real estate market, or at least looking into it, check out this article. You might be surprised to see that investing in real estate might not be a good option for you.
The market is still growing
The market is still growing. Do you really trust the market?Investors are like people, they look for certain things to support their investment decision. Like people, they look for certain characteristics about a particular person (like income and age) that they are confident will last the years they are investing in. With investors, the characteristics that need to be considered, and that are believed to work, are the type of property (the type of property will tell you the location), the valuation (value), the rent increases, the market condition (forecast analysis), future growth of rentals, and the type of development (if the development is rental, it would help in the rent increase which helps in the future growth of the investments) they are buying.While these are very important, all of the investment opportunities come with their own particular challenges. The market is growing, the value is growing; this does not mean, that it will remain stable forever.The best time to buy real estate is when the market is growing. However, to determine a point in this case, it is necessary to consider how the market is performing in the right way — like a person is living inside the house (value), or should live in the house, with better living quality (quality). In this case, market value can be an important point of consideration.Investors tend to like stability when it comes to investment decision, as it means, they could stay the same or do better in the next three years (value). However, the market is still growing, which in case is an indication that things may be going better in the next few years or may be going worse. But this does not mean the market is going to stay stable forever.Investors need to start their investment decision by knowing these facts and considering whether these facts really help them in their decision making
Historically low mortgage rates, affordable home prices.
3 Things to Consider Before Investing in the Real Estate Market: Historically low mortgage rates, affordable home prices.While the housing rebound has been slow over the past few years, the country’s hottest markets like Detroit, Charlotte, Tampa and Raleigh continue to look to record breaking home prices for a bounce back to the peak. The hottest markets have experienced home price increases between 17-25% in the first quarter so far this year, compared to average growth in other markets like Portland, Oregon, Atlanta, Charlotte and Tampa (7-10%), according to Realcompare.com.Home prices continue to outperform all other assets, growing by an average of 6% from last month to this date. This is better than the country’s top 10 asset classes that are growing by an average of 1.5% from last month to today, according to realcompare.com.Mortgage rates continue to be at historic low levels, having dropped to 1.5% in early January. This is the lowest level and lowest annual rate since the housing market crash of 2008. Home prices in many markets, like Charlotte, are up 30-50% from their peak.As home prices continue to grow in the hot markets, they are often priced below what investors can afford in a single family home in certain metro areas. The home market is only at the start of its growth spurt with limited supply for new construction homes. With so many new supply coming onto the market and demand still outstripping supply, investor interest in the area can be seen in the numbers.Real estate has enjoyed record lows for a couple of months already, according to realcompare, however you have to look at each market situation individually. There are very few houses not priced below $
Luxury home values are rising faster than overall prices
Luxury home values are rising faster than overall prices. When you buy a house, it typically represents about 85 to 90 percent of your original investment.Luxury home values are rising faster than overall prices. When you buy a house, it typically represents about 85 to 90 percent of your original investment. It is wise to invest in real estate in a safe, established market. But, there are also opportunities to profit in risky markets. This is especially true if you buy into a hot real estate market when it’s falling apart and trying to rebuild. In the same way, it’s wise to avoid real estate investment in an up-and-down marketplace.Real estate can be a profitable play in the first five to seven quarters of a cycle, but not in a market you hope to own your home in for the long term. Real estate can even turn out to be a losing proposition in boom periods as well as busts. That is to say, real estate shouldn’t be invested if the market is expected to make money. You should also consider investing in real estate if you have experience with buying real estate and don’t see any opportunity to profit from the investment yet.A recent study from the National Association of Realtors (NAR) estimates that in the upcoming market for the Class A and Class B luxury housing markets (with prices between $1 million and $4 million and $5 million and $10 million respectively) there will be 3.9 million transactions with an average selling price of $3.5 million. This is a slight increase from last year with an average selling price of $3.4 million but a significant decrease from the previous cycle’s average of $8.5 million.In this market, buyers have an opportunity to buy expensive homes in luxury neighborhoods, which are generally located in more sought-after and established markets in North America.