Is the current housing market favorable for real estate investments? That is the question many beginner real estate investors forget to check before entering the US housing market. In order to be successful, you should always check the condition of the current housing market before buying an investment property. Competition and prices for investment properties are changing constantly in the US housing market and in order to succeed you need to be up-to-date. So, how can you understand “When to invest in real estate?” as well as “How to invest in real estate?” Well, this blog has all the answers regarding the current US housing market.
However, note that you should also able to conduct different analyses, such as real estate market analysis and investment property analysis in order to understand if investing in real estate is a good decision at this moment.
#1 Demand and Supply Relationship in the Current Housing Market
The high demand for housing units is considered as a positive sign for real estate investors that are planning on selling or renting out their investment properties. One of the golden rules of the real estate business states: “When the demand for investment properties rises, the prices for real estate investments increase.” This means that an investor who plans on selling or renting out his/her investment property in the current housing market may increase the asking price for the property.
Nonetheless, there will still be potential customers who are considering buying an investment property despite the new higher prices. Even if home prices are rising, buyer’s demand is stronger than ever. That makes the current housing market extremely competitive. Many investors do not ask “How to invest in real estate?” Instead, the majority are curious about “Where to invest in real estate?” as a typical home goes under contract in 43 days. This time frame is 8 days shorter in comparison to the previous year.
It is important to note that during March 2018, more than 23% of the real estate investments were sold above their listing price. Moreover, one in five homes that were sold in March went under contract within two weeks according to a new report from Redfin, a national real estate firm.
Furthermore, the current housing market is favorable for real estate development companies as it is a good time to start building. As the figures show, the seller’s enthusiasm is decreasing, thus, the current housing market is short on supply. This gives the opportunity for real estate developers to get busy with new projects and start investing in real estate.
Curious to learn about the hottest US real estate markets? Make sure to read “What Are the Hottest Real Estate Markets 2018 in the US?”
#2 Competition in the Current Housing Market
Is real estate a good investment in the current housing market? Where to invest in real estate right now? Below you will find some highlights of the competition in the current housing market that will help answer these questions.
March Highlights: Competition
Well, Denver, CO and Seattle, WA were the fastest real estate markets as approximately half of all homes waited only seven days before being sold. San Jose, CA was the second fastest market with nine median days on the market. Moreover, the most competitive US housing market in March was San Jose, CA where 83.2% of homes were sold above the asking price. This was followed by 76.1% in San Francisco, CA.
#3 What Is the Influence of Interest Rates on the Current Housing Market?
In spite of the fact that mortgage interest rates have slightly increased over the past year, the number of investors who are borrowing is still rising. More and more people are searching for the best place to buy an investment property. Consequently, the majority of them are searching for the best financing options as well. Therefore, the higher the demand for taking a loan is, the higher the interest rate will become.
However, will the increased interest rate have a negative effect on investors’ willingness to continue with investing in real estate? A survey was conducted by Redfin in order to understand if investors’ behavior on buying an investment property will change if the interest rate surpassed 5%. The results showed that from 4,000 participants, only 6% would cancel their plans for buying an investment property. The rest would still search where to invest in real estate. Results show a positive outcome for the real estate industry. Even though investment property prices, as well as interest rates, are growing, investors are searching for the best place to buy an investment property.
#4 How to Learn about the Current Housing Market
The best way to learn about the current housing market in which you want to find the best place to buy an investment property is to conduct a real estate market analysis. Moreover, in order to select the best investment property, you should perform investment property analysis as well. Below, you will understand why it is important to conduct these two types of analyses.
Real Estate Market Analysis
A real estate market analysis is the first thing a real estate investor should do when planning on investing in real estate. After conducting real estate market analysis, you will be able to understand if you are dealing with a buyer’s or seller’s market. Additionally, it takes into consideration the supply and demand in your area. Moreover, this analysis evaluates the value of your investment property based on the market value of real estate comps. This information is crucial to know in order to stop yourself from overpaying. Interested to learn more about real estate market analysis? Make sure to read “Real Estate Market Analysis in 6 Simple Steps.”
Investment Property Analysis
Investment property analysis is a process of analyzing a potential investment property to establish its feasibility, based on various aspects that have an influence on the property’s performance. A real estate investor should take several aspects into consideration depending on the type of the investment property, investment strategy as well as the final goal the investor aims to achieve. Consequently, the investment property analysis tends to help the investor to indicate various factors that may affect the performance of his/her investment property.
Due to the large quantity of data, there is a chance of making a mistake. In order to avoid miscalculations, a real estate investor should consider using Mashvisor’s rental property calculator.
Mashvisor’s Rental Property Calculator
Mashvisor’s rental property calculator is one of the best tools available on the market. This tool calculates all the real estate metrics needed for conducting investment property analysis. Moreover, with this tool, you are able to find the most profitable properties or the low risk investments in the local housing market. Besides that, the tool provides you with detailed information about the property as well as its surroundings. Thus, finding the best neighborhood is an easy task. Additionally, it will present you with the optimal rental strategy depending on the type of the chosen investment properties. Interested to know where you can find a rental property calculator? Make sure to read “Where Can You Find a Rental Property Calculator?”
#5 Is the Current Housing Market Favorable for Real Estate Investments?
The answer is YES! The demand from the side of the buyers is growing. The fact that there is a slight increase in the interest rate does not scare experienced and future real estate investors. Moreover, there are great opportunities for real estate developers to build new housing units. Therefore, there will be a greater option for where to invest in real estate. Additionally, the market shows growth and great opportunities for future investments.
To learn how to invest in real estate, continue reading our blog.