Keep an Eye on These Trends When Investing in Real Estate in 2022
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A global pandemic and economic woes have slowed everything down except the housing market. CNBC reports that during Spring of last year, sales of homes dropped from an estimated 4 million properties sold between March and May and have now there is a need for nearly 7 million homes before the end of the year. The problem is, you can't count on today's gains as an investor, as things can quickly turn for the worst at any moment. However, there are a few trends worth watching to help you strategize a way to protect best and maximize the return from your investment.
Mortgages are Currently Easier to Secure
It may seem like a contradiction during national economic issues, but mortgages are easier to secure. Mortgage credit availability was up 3.9% increase between July and August of 2021. Lending standards have become laxer, allowing even those with unsatisfactory credit to take advantage of an investment loan
When mortgage rates are low and stable, the real estate industry gets a jumpstart. Though this trend could end at any moment, mortgage interest rates are also at all-time lows, as significant elections, even a year from now, have this effect. The Mortgage Reports organization cites that the average rate on a 30-year, fixed-rate mortgage was just 2.74% in January, up from 3.62% in 2020 and 4.76% a decade prior.
Looking to Manage Property? Rent Payments at All-Time High!
If you have the start-up capital, the time to become a property owner and landlord is now. With the eviction moratorium in the past, prospective renters have reached record numbers. Alongside housing prices, rental prices have been climbing, too. The Department of Housing and Urban Development reports that the average rental price for a place has increased 32% since 2010. With housing prices more expensive than most goods, it might be a lucrative idea to offer some amenities (in-unit laundry, appliances, utilities, etc.) to hook a renter who might otherwise be skeptical about the rental price.
Worried About Market Volatility? Rest Assured!
Real estate rises and falls in a cycle. As we saw with the housing crash in 2007-2008, there are some busts and booms. Fortunately, most experts wouldn't label this close to another crisis just yet. Though we are in a recession, there are several differences in today's housing market versus the past.
Property owners usually are clocking large amounts of equity. Homeowner equity has jumped by $1 trillion in one quarter, and according to recent data, barely 3% of properties hold negative equity. If someone's extra nervous about buying, then the equity that protects borrowers if their homes inexplicably lose value is going to give them some breathing room until the market moves back.
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