Buying an investment property is a hard and complicated decision. Before making any purchase, we have to think and consult with others to take an opinion about doing it or not. All of us at some point assumed that when you’re buying the house, the seller is the winner and you are a loser. Finally this is about to change. A dramatic shift in the US housing market will see the scale balance switch. Buyers will finally be able to have the last laugh about their purchase because it will soon be a buyer’s market.
The housing industry was favoring the sellers and not buyers for one simple reason. Selling power. The sellers were holding the strings controlling the price to suit their needs and demands. It is normal to assume that because in the end the sellers post their ads about wanting to sell and they wait to drown in offers one exceeding the other. The control they had elevated prices of houses. It was harder for the average person to deal with the vast sums needed for buying an investment property, not to mention mortgage interest and taxes.
The inevitable switch of the housing market from a seller’s market to a buyer’s one will be expected by the year 2019 according to an experts survey conducted by Zillow. But to answer the most important question, why is the tide shifting? What factors have caused this change? The answer rests in four fundamental housing purchase factors, which are increased number of houses for sale, historically low mortgage rates and a stable economy. These things put together decide whether you are ready for buying an investment property or not.
Increase in Number of Houses
It is universally known that when there is an excessive amount of supply of a valuable property or service, its price will be pushed down. The same law applies here, with more houses being built and put up for sale it creates less chances of the sellers controlling the power of the process.
For example, if one town has 20 houses for sale only and around 200 potential buyers. The 20 sellers have control because there are so many people wanting this limited number of houses that it creates naturally a bidding war or competition between all the buyers on who succeeds in buying the investment property eventually. However, if we look at an alternative scenario in which there are 100 houses for sale and 80 potential buyers. Power has changed from a seller’s one to a buyer’s one. Not all potential buyers have the same taste, price and location preference; therefore chances are that they are going to dictate how the selling game is being played. Buying an investment property will be a whole lot easier when you have so many options to choose from.
The increasing number of homes had one more effect on the housing market from another dimension. More houses has diminished and reduced the rate at which appreciation of houses grows and that has made house prices rise but to an affordable level.
Low Mortgage Rates
The low mortgage rates in recent years have certainly helped in feeding the demand of the housing market by trying to supply them with more. Contractors and housing development projects understand that people are able to afford the low mortgage rates on offer nationwide. The mortgage rate in 2016 has been in and around 3.5% and is expected to rise to 4.0% in 2017. Even at its rise the mortgage rate is still low compared to ten years ago after the global financial crisis. Buying an investment property is hugely dependent on the mortgage rates you need to pay because it determines if you will be using that investment to pay off the mortgage rate or making some profit.
The fact remains that the U.S. economy is witnessing an increase in fortunes in the last couple of years due to political, economic and social stability. People have better job growth now with their income expected to rise almost annually, which means they are able to afford buying an investment property. People who think about entering the real estate market are ones who know that they have their future at least secure in case of failure or catastrophe. The growing number of people entering has certainly made that become a reality. It is factual to say at the moment that employees feel secure to invest with the comfortable mortgage rates, solidity of the dollar value and the stable political situation.
The switch in the US real estate market to become a buyer’s market is big news for investors. There has never been a better time to buying an investment property and using it for the sole purpose of making profit. Too many buyers have stood up to what they thought what was wrong; the price tinkering that was being made by sellers for years. The market is now entering a realistic era between buyer and seller that will only lead to a phase of tranquility in a market that used to volatile. Use data when buying an investment property to make sure you’re getting the most lucrative property.