Historically, spring is a good time for real estate market. According to the National Association of Realtors (NAR), almost 40% of annual sales take place from March through June – that’s a lot of sales! 2020 spring too was headed for a great year, however things changed drastically on the background of COVID-19 pandemic.
COVID-19 has affected economies world over; global trade is still in shambles, stock market forecasts look grim, it has cut thousands of jobs and wiped out a lot of savings. Housing market is no different and it did experience the heat this spring, however based on the current market conditions, there is good news for serious investors looking to invest in rental property.
Let us look at some of the facts around real estate market
1. There was a lack of housing supply even before the pandemic. The US real estate market will continue to tighten as the past 6 months has seen very little construction activity. As the builders can’t get financing in this period of uncertainty the downward trend on the supply side will continue.
2. Low supply and greater demand will continue to drive the prices up in major cities and other saturated markets. The property prices are moving north almost everywhere, but experienced realtors believe non saturated large metropolitan areas are a good buy currently.
3. Stock Market is extremely volatile, and the pandemic has wiped out a lot of profit from the market. From investment point of view, diversifying in the housing market is a good option.
4. Mortgages were low and with the pandemic still surging they are searching for new bottom. Securing mortgage with the current interest rates is a good decision.
5. The housing market is showing signs of recovery since May and mortgage applications too are on a rebound.
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Why should serious investors consider investing in rental property?
As the pandemic hit, the demand fell, however so did the supply. This ensured that there was very little price fluctuation. Now with some stability in view, the pent-up demand of homes is driving the sales. This will taper off soon, as the supply continues to be tight. It is a good time for the serious investor to consider investing in real estate.
Here are some points to keep in mind when looking for investment options in the housing segment.
Supply of pre-existing homes will be higher
With credit being tight, new construction is still slow. Pre-existing homes are the ones that will drive the market. As the supply dries up the prices are bound to increase further so now is a good time to close the deal.
Only serious sellers in the market
With the current pandemic and an uncertain future, not many are putting their homes on sale. Those in the market are there to close the deal and they would be open to negotiations as opposed to before the pandemic.
Low mortage rates mean a buyers’ market
With unprecedented low mortage rates, it is a great time to buy a home or refinance homes. The governments economy stimulus will ensure that the rates stay low for the larger part of 2020. Predictions state that the appreciation in the property markets will either be V shaped or W shaped, which means this is a great time for serious investors to buy some property.
Suburbs might be a good place to invest
People are wary of staying in densely populated areas. The way virus is spreading and with the extension of work from home policies, more and more families are considering moving to the suburbs. Affordable large metropolitan areas might be a good place to invest currently.
What returns to expect on real estate investments?
Housing market remains a good area to invest. But the buyer needs to remember that this is a long-term investment and the returns will be visible only after a couple of years. The pricing will continue to remain stable, however if there is a surge in foreclosures the picture might be a bit different.
Rental property investments are long-term investments
We still don’t know the full effect of recession, but experts believe the recession will not affect the pricing in the housing market the way it did in 2008. Those who can afford to wait it out for returns to materialize must consider rental investments. Experts believe positive pricing may be possible only after the first quarter of 2021.
It is always best to talk to experts and know your options before entering in the rental property investment markets. Property managers are making use of business analytics to predict the trends and the ROI; hence they would be able to help you make an informed decision. Rialtes, flagship product RealForce can create complete visualizations, predictions, insights, and more by bringing all your data onto a single unified platform. To know more contact email@example.com
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