Yes. The benefits of investing in real estate are plenty. However, “Is buying real estate a good investment?” isn’t a simple yes or no question. There are definitely a lot more details involved when buying an investment property. This is also a subjective question. The best investment opportunities differ for a lot of people. It all depends on your goals and real estate investment strategies. But, in general, investing in real estate is a game-changer for many people.
One thing’s for sure though- everyone can benefit from a bit of research. So we’ve made a list of some of the most important factors to look at if you’re asking is real estate investment a good idea right now.
Related: 4 Important Factors Affecting the Real Estate Market
Is Buying Real Estate a Good Investment?
Let’s Look at the US Housing Market Predictions
There are many elements to consider when making investment decisions. Investors can find the answer to “Is buying real estate a good investment?” based on how much these factors impact them. While no one can say for certain how things will play out, good research and a study of key market trends will get you close enough. Take a look at these factors and decide if real estate is the best investment for you in the coming year.
Affordability
The US housing market has been facing a problem with affordability over the past decade. A lot of people want to buy property, but don’t seem to have the financial resources to do so. Affordability is defined as the percentage of one’s median household income spent on the median household mortgage in a particular area.
Many investors prefer investing in their local market. But buying a rental property could prove to be more expensive than what you can take on if your market’s affordability is going down.
Affordability is one of the main reasons behind the slow down in the housing market this year. Many potential home-buyers are now more inclined to rent for housing.
So, is buying real estate a good investment when taking it from the affordability scope? Well, it depends on the investor. Home prices are just as high for real estate investors, but they’re buying this property as an investment. Owning a rental property in the right market could pay off with all the renter demand.
If your local market is too expensive for you, you have the option of searching elsewhere. Check out the most affordable real estate markets.
Home Sales and Property Prices
Yes, affordability is a problem in many markets, but in 2017, 10 of the top 100 metro areas saw prices soften. Now what this means is that growth was at least 1 percent slower than annual growth over the past three years. So that begs the question, is buying real estate a good investment compared to prior years?
Home sales are gradually increasing as the aftermath of the recession starts to wear off. Well, current home sales are looking similar to what we would’ve seen in 2003, but household growth has increased by 13.5 percent over the last 14 years. That combined with increased construction can lead to increased buyers in the market.
As the market begins to slow down on the national scale, take a closer look at local conditions. After all, real estate is local. When there’s economic volatility, you can expect to see different trends even among neighborhoods in the same city. This is why it’s always good to actually understand the different performance levels of the sub-markets in your area.
You can use Mashvisor’s Heatmap to highlight neighborhoods that meet your specifications (such as low property prices). This will help you find the best real estate investments. Is buying real estate a good investment? It is when you have the right resources. Click here to use the Heatmap.
Mortgage Rates
They are on the rise. So here’s what we know. Current mortgage rates continue to be lower than they were during most of the recession and are actually below average considering the type of strong economic growth the US has been experiencing. However, this will change. Forbes predicts the 30-year, fixed rate mortgage will reach 5.8 percent.
What does this mean? Is buying real estate a good investment with mortgage rates increasing? Well, some people might be discouraged to buy property, whereas others (who already experienced the mortgage rates of the recession) won’t be too worried about this.
Related: Invest in Real Estate Now as Investment Property Mortgage Rates Are Rising
Housing Inventory
Inventory levels remain low and owning property under these conditions is desirable to many investors. According to Forbes.com, national inventory increases are expected to remain low. The majority of inventory increases are expected in:
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Best Real Estate Investment Strategies
You can also answer the question “is buying real estate a good investment?” depending on your investment strategy. Rather than investing in property following the fix and flip strategy, how about you invest in property for income. Investors should invest for cash flow, not appreciation, in the market. With younger generations staying in the rental market longer, investors could expect strong returns with income property.
Related: What Makes for the Best Income Properties in the Real Estate Investing Business?
How Investors Can Make the Best Real Estate Investments in the US Market
Anytime you ask a question like is buying real estate a good investment, there’s really only one way to answer: If you have the right resources and tools, it is. Every investor wants to make the best deals under the market conditions they’re in. There really never is one exclusive set of rules on how to invest in real estate. It comes down to having reliable sources, and accurate data. That’s something you can find with Mashvisor.
Mashvisor makes it easy for real estate investors to search for, locate, analyze, and buy investment property- all on one platform. This year is definitely the time for investors to take advantage of technology’s effect on the industry. Now the question changes from is buying real estate a good investment to how can I make a good investment. Join 1000s of other real estate investors across the nation by starting your free trial now.
To start your 7-day free trial with Mashvisor and subscribe to our services with a 15% discount after, click here.