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What should we know about real estate today?

What should we know about real estate today?

Knowledge for the next investment

Master Investor
March 02, 2023

If we aren't growing, we are supposedly dying. It is crucial to continue learning throughout one's life. Of course, it's not just about investing time and money in a formal school (unless you really want to); it's also about reading books and articles from reputable news sources and picking the brains of successful individuals in our field who are leading the lifestyle we desire. When it comes to investing in real estate, this is especially true. What should we know about real estate today?

Is dipping our toes into the real estate investing pool one of our New Year's resolutions? Or perhaps we have already made some investments and are curious what the future holds for the sector?

As we might expect, we've been paying close attention to numerous studies and projections for 2023, and we have some interesting information to give.

What should we know about real estate today?

Here are tips for the real estate market

Here's a quick summary of what we've seen so far. You can evaluate new investment options this year with more knowledge if you read the material below:

1- Mortgage rates that are typical

According to a Forbes article, the following data is interesting:

6.48% is the current average mortgage rate for a 30 year fixed, compared to 3.22% at the beginning of 2022.
A 15-year fixed-rate mortgage costs, on average, 5.67% today, compared to 2.43% in early January 2022.

Rates for a 30-year mortgage in the US have fallen to some of the lowest levels ever recorded in the history of our country over the past few years. Then in 2021, we achieved a record-breaking low of 2.65%. Everyone seems to be refinancing and purchasing homes in order to take advantage of these fantastic prices.

But in 2022, that changed. When the pendulum swung, the majority of housing experts forecast that these rates would plateau in 2023 at roughly 5% to 6%, however some said they anticipate the increases to last until this year's spring.

2- Continued shortage of real estate inventory

Are there any brand-new residential housing complexes where you are? Not many, probably. As there haven't been many new housing projects, there hasn't been much of a supply of homes on the market. And the deficiency is still there. Not in all cities though because in Miami is always being develop and constructions is rising daily.

Another Forbes article claims that the week of November 28, 2021 saw the lowest ever number of properties for sale. And this piece from the National Association of Realtors reaffirms the fact that buyers will likely continue to have difficulty finding affordable housing in the coming year.

What then is the cause of the lack of available real estate? Many homebuilding enterprises failed as a result of the housing meltdown more than ten years ago; this is largely to blame. The higher-end housing is the focus of the limited construction that is taking place since the margins are more lucrative, pricing out millennials and other first-time purchasers. Simply put, the demand for new housing is outpacing the supply, which is driving up the cost of housing.

The remaining consequences of the epidemic and economic uncertainty, for which many homeowners are opting to "wait and see," are, of course, additional factors. Also, anyone who lost their job might have trouble getting a mortgage, which will prevent them from moving.

You might need to adjust your expectations of what you're searching for or be ready to spend more money than you had anticipated in order to buy real estate because there are so few homes available. Expect bidding battles even then because of the heightened competition. In order to have a chance of winning the property, you'll probably need to make an offer the same day you visit it, so make sure you have everything ready for financing in advance.

3- Suburbs are becoming more and more popular

A few years ago, we reported that many individuals were being forced to migrate to the suburbs due to the soaring cost of housing in big cities. We also discussed how tech firms were beginning to relocate to smaller cities where millennials could live comfortably.

It may not matter where you live at all given that so many firms have changed to a remote work style in response to the pandemic, and many aim to keep doing so long after it is all over. As a result, people are moving in large numbers away from expensive places.

4- Excellent rental market for inside investors

What then happens to all those folks who are unable to purchase a new home due to escalating prices and a lack of available inventory plus lack of financial education? Of course they rent! For landlords (inside investor aka master investor), the strong rental market is wonderful news since it means less worry about vacancies.

Since 2005, (when it peaked) the homeownership percentage in the United States has been dropping, according to Master Investor and business partners. Also, the need for housing has expanded as a result of the 50 million people who have entered the country over the past 20 years as a result of immigration and rising birth rates.

We can generate greater positive cash flow from your tenants because rental prices are rising nationwide. For instance, the cost of renting a one-bedroom increased by 21.3% in December 2021 compared to the same month in 2020, and the cost of renting a two-bedroom increased by 16.7%. Wow!

5- Amenities will attract inside investors

Making appropriate amenities selections is one approach to draw new renters to our rental property. Upgrades like keyless entry, smart thermostats, doorbell cameras, open floor layouts, stainless steel appliances, in-unit laundry, media rooms, safe parking, and online rent payment are what tenants are searching for. In order to choose what will draw the right tenants to our investment property, we should investigate these possibilities and the competition in our area.

We are reading: What should we know about real estate today?

Resources and advice to get you started

It's honestly difficult to predict with any degree of precision what will actually occur. That is why at Master Investor, our motto is to prepare for any type of market through financial education so that we can hedge for inflation and bad economies. We can always cash flow when everyone else is loosing money.

Because of this, it's crucial to keep an eye on the market and learn as much as we can about our town's neighborhoods, trends, and inventories. To be certain that this is the best course of action for us, we should also do some research on real estate investing in general. Start building a team of experts that will help along the way.

Here are a few pointers and tools to get you started on your real estate journey.

Search for new purchasing patterns: Knowing the demographic is always vital in real estate, but times are changing. Think about the following:

The historic colonial-style homes were originally all acquired by baby boomers, who are now prepared to downsize. They also prefer ranch-style homes so they won't have to climb stairs as they get older. Nevertheless, they don't only desire less space. Why does that matter? The value of single-story homes will rise as demand does.
By the end of 2023, millennials may account for 43% of those taking out mortgages to buy a property. They are now prepared to buy their first homes. They are being forced to give up the urban lifestyle they desire in favor of the country since they are primarily looking for affordability and quality of life.
More than 10 million people lost their homes to foreclosure during the Great Recession, but thanks to changes in foreclosure law, their seven-year wait is over. In total, 28 million Americans are predicted to buy a home in 2023.

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