Top 5 Reasons to Invest in Real Estate Now
If you’ve been on the fence about whether you should jump into the housing market at this point in time, you’re not alone. Changing interest rates, rising home prices and concerns about tight financing restrictions have caused many investors to think twice before committing to a new property.
I believe that investing has the potential to be profitable now more than ever, and that those who don’t act now may end up regretting a missed opportunity.
Here are my top five reasons why now may be the time to take the leap, if you haven’t already, or step up your game; especially if you’re in it for the long haul.
5. It’s that time of year
Fall and early winter are great times to invest. Demand peaks in spring and summer and falls in autumn. Come fall, there’s more inventory to choose from and less competition from buyers. In addition, because of slow demand, sellers are more likely to make concessions and you’re more likely to find a deal.
4. Foreclosure Rates are Still High
According to Realty Trac, as of September, national pre-foreclosure rates fell nearly 28 percent from the previous year. However, they rose 4.5 percent over the previous month. Foreclosures are very recently rising, and the number of overall homes in foreclosure is still high at one in every 998 homes. In markets like Florida, Nevada, Maryland and New Jersey, the rate is up to almost four times higher. If overall broader trends continue, foreclosure will continue to drop, home prices will continue to rise, and the market will likely absorb much of this low-cost inventory.
3. Home builders are motivated to sell
Due to the hesitance of potential homebuyers, demand for homes has recently waned. In an effort to stimulate the market from within, many builders are offering great incentives like cash, upgrades, property and financing perks to encourage home purchases. In addition, lower demand means more options and more leverage during negotiations. You may be able to buy into great neighborhoods or premium properties at lower prices, with extras thrown in to boot.
2. Home prices are increasing
Home prices rose a full 12.4 percent between July of 2012 and July of 2013 – the biggest increase since 2006. The increase began slowing slightly in July of this year, but prices are still steadily ticking upward. This may not sound like a great incentive at first, but it just might be. Prices may be climbing, but they’re climbing up out of the deep hole they plunged into after the Great Recession. Even with increases prices are still substantially lower than they were at their peak in 2008. If the present market recovery holds, prices could continue to increase significantly over the next few years. Investing now can get you locked into a reasonable price, and could earn you to a steady increase in equity over the next couple of years.
1. Interest rates are rising (and falling)
This year, interest rates rose from 3.4 percent in January to 4.7 percent, before falling to 3.9 percent in October due to the debt ceiling decision and a disappointing jobs report. In spite of current uncertainty and setbacks, there is every chance that interest rates could rise – potentially dramatically – in coming months. If they do rise into next year, you will be walking into equity. If they don’t, you’d still be taking advantage of a historically low rate, which can serve you well for a long-term investment.