Is now a good time to buy a house? Reports show that for first-time buyers, now is a good time to enter the real estate market.
Steady Interest Rates Make Now a Good Time to Buy a House
If you’re a first-time real estate investor who has been waiting for the right time to make a move in the US housing market, then experts say now is the time.
The Federal Reserve has cut interest rates multiple times this year in order to boost consumer activity and protect the US economy. This has led to a drop in mortgage rates. As a result, buying a house has become more affordable for the average American. And while investment property mortgage rates are typically higher (about 0.5-0.75% higher), real estate investors can still benefit from the general drop in mortgage rates.
Related: What the Fed Interest Rate Cut Means for Investors
While there has been speculation around further changes in monetary policy and interest rates before the end of the year, this past Wednesday, the Federal Reserve indicated that interest rates will remain steady for the time being and possibly through 2020.
In the first unanimous vote the Fed rate-setting committee has witnessed since May, officials decided to keep the central bank’s benchmark rate at 1.5%-1.75%. This is mostly due to the consensus that the US economic outlook for 2020 is a positive one, according to the Fed Chairman, Jerome Powell.
A week before this announcement, the average 30-year fixed-mortgage rate was at 3.68%, down from 4.75% the same time last year, Freddie Mac reports. Rates also held steady from the prior week.
Of course, with the low-rate environment, strong job market, and the generally positive economic outlook comes a forecast for a rise in US home prices as buyer competition heats up. House price trends for 2020 show a continuing rise as inventory shortages continue. Essentially, now is a good time to invest in real estate. It will allow you to take advantage of the lower mortgage rates and get in the housing market before prices rise any further.
Where Should You Invest in the US Housing Market Right Now?
The issue of low shortage of affordable homes for sale is still rampant in the US. This is an issue for homebuyers and real estate investors alike. However, as a real estate investor, you have the option of buying a rental property out of state. So where in the US is now particularly a good time to buy a house for investment? First American Financial, a real estate title insurance company, reports that there are still locations with affordable housing supply for buyers. Mashvisor’s data shows that the reported top 5 locations where you can find affordable homes for sale also make for some of the best places to invest in real estate:
Top 5 Cities to Invest in Real Estate Now
1. Oklahoma City, Oklahoma
- Median Property Price: $279,950
- Traditional Rental Income: $1,167
- Traditional Cap Rate: 1.0%
- Average Days on Market: 56
- Price to Rent Ratio: 20
View Oklahoma City investment properties for sale with cap rates up to 17% here.
2. Louisville, Kentucky
- Median Property Price: $244,872
- Traditional Rental Income: $1,365
- Traditional Cap Rate: 1.5%
- Average Days on Market: 77
- Price to Rent Ratio: 15
View Louisville investment properties for sale with cap rates up to 20% here.
3. Memphis, Tennessee
- Median Property Price: $233,435
- Traditional Rental Income: $1,035
- Traditional Cap Rate: 1.9%
- Average Days on Market: 62
- Price to Rent Ratio: 19
View Memphis investment properties for sale with cap rates up to 16% here.
4. Birmingham, Alabama
- Median Property Price: $248,675
- Traditional Rental Income: $1,158
- Traditional Cap Rate: 1.4%
- Average Days on Market: 96
- Price to Rent Ratio: 18
View Birmingham investment properties for sale with cap rates up to 14% here.
5. Kansas City, Missouri
- Median Property Price: $258,800
- Traditional Rental Income: $1,290
- Traditional Cap Rate: 1.1%
- Average Days on Market: 98
- Price to Rent Ratio: 17
View Kansas City investment properties for sale with cap rates up to 19% here.
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