Many property investors are now waiting for the market to crash. There is a possibility of the prices going down lower, however, there might be better ideas than waiting for the perfect opportunity.
The housing market has seen its lowest point since 2020 as the prices have reached the highest level and it was difficult for buyers to find the perfect house for their businesses. These past few months, housing prices have decreased.
Buying a property is not a simple matter, if you buy now when there are significant discounts, your house value could fall over the next few months. The question remains unanswered, should landlords wait for greater price drops or buy now at a discount? There are some pointers and factors to be considered.
The Housing Market Statistics
Housing prices have only been increasing for the past three years, however, since October of 2022, we can see a slow decline. The housing inventory dropped at the beginning of 2022, only to rise before August and then lower again. We can also see that the demand has decreased from 60% to 30% since August, so we can see a reason for the lowered pricing.
At the moment the average price for a property in the US is $397,408, in October of 2022 it was nearly 450 000$. We can see a clear drop here which is highly beneficial for buyers. If you are a property investor, this seems like the perfect time to expand your business. Although the prices can continue to get lowered and you might regret your decision, there is still a pretty good chance that you will not get to purchase the dream house at an affordable price in the future.
Property investors and property managers have much more to think about than whether or not the houses will be cheaper in the future. Rent prices, recession, transaction volumes, locations, and many other factors are still to be considered.
Buying a Property During a Recession Is Difficult
Although prices drop gives property investors a great deal of hope, you need to consider the lenders’ approach. During the economic downturn, lenders tend to narrow down the landing opportunities for borrowers. Therefore if you don’t have a record at the bank, you might have a harder time purchasing your dream property at a reasonable price.
On the other hand, if you already own properties, your property management company would advise you to wait for the recession. You can clear the history over time, and as financial experts predict, when the housing prices fall over the next two years, you can purchase at a drastically lower price.
Rent Value Is The Most Important
The property values can drastically change over time, however, depending on the location and condition, rent prices usually stay stable. You want to purchase a property that will provide you with valuable income and give you a great deal of profit. As a property investor, your main goal should be to make as much of a passive income as possible.
Purchasing a property now might be a better option if you have found the right one because the real estate you have your eye on might be off the market next year. If you end up buying the property that you can set a high rent price for, the property will pay the mortgage on its own and you will still have a lot of bonus money.
Despite the predictions of experts, the market might switch up dramatically at any point, therefore you need to make a smart decision at the moment and keep your eyes on the most profitable property. You might think that you need the type of real estate that could sell for more money in the future, but if you can rent it out for a large sum of money, you won’t need to think about selling.
During times of lowered housing prices, homeowners are reluctant to sell their properties. The homes still need to be more affordable due to mortgage rates and the transaction volumes are being lowered. Therefore overall average pricing in the housing market is expected to drop.
Differences In Regions
It should be noted that the price drops affect only some of the regions and with different volumes. Every state is in its economy and while you may find properties at low prices in certain places, homes in other areas are unaffordable.
If you find a property that is affordable in a region that’s convenient for you and your investment then it’s best if you weigh your options carefully and make a quick decision.
The Prices Could Rise Again
The experts predict that the prices are going to fall, however, the market can be quite unpredictable at times, therefore, it’s not unlikely for the value of houses to increase unexpectedly. The economic situation is volatile and as we have seen in the past, a great event, such as a pandemic, could happen at any moment and change the ways of the world economy again.
You can’t rely completely on the predictions and expected possibilities as anything could happen. At this point, housing prices have decreased the most in the past few years, so it might be regrettable if you wait for them to drop even lower.
As we discussed, the housing market has given American buyers a chance to get their dream properties at more affordable prices than in the past. However, for landlords, there are still many factors that have a big impact on the decision.
Property investment is no light subject, there are many precautions to take. If you fail to consider every detail, including the location, rent prices, predictions, and statistics, you might make a regrettable decision. The best choice for property investors is to sit down and discuss the market with their property managers. Housing prices might drop drastically in the future, but you have to be sure that you can take that chance.