Right now might just be the perfect time for real estate investors and those new to the market. After a couple of years with a super hot market, 2020 and 2021, we’re finally seeing some good deals pop up.
I’ll be the first to admit, I’m pretty biased towards real estate. It makes up about half of my net worth, and honestly, there’s no asset I value more than my home—it’s where my family lives, and they mean everything to me.
If you’re skeptical about investing in real estate, I’d love to hear your thoughts!
Back in February 2022, we saw a dip in the housing market, which lasted around 18 months. But as of now, in 2024, things are looking up again thanks to a combination of pent-up demand, a robust economy, record-high stock wealth, and the hope for lower mortgage rates.
Here’s why I think the timing was right to buy real estate in 2023, especially during the last quarter:
1. The stock market has been pretty shaky, especially in 2022, with major U.S. indices and tech stocks taking a big hit. This makes hard assets like real estate more appealing.
2. A stock market correction of 10% – 15% tends to shift focus towards safer investments like real estate. Although the market is down, it creates a unique opportunity where real estate often holds its value better.
3. With inflation high and real mortgage rates still relatively low, it’s almost like getting a loan for free. Inflation is rising faster than mortgage rates, effectively reducing the real cost of borrowing.
4. Strong job growth and high consumer cash reserves boost real estate demand. More people can afford down payments and larger mortgages, and there’s an increase in cash buyers.
Looking ahead, if you’re planning to buy, the market seems to be improving for that too:
1. We might see a decline in real estate prices over the next year. The market’s recent extreme growth isn’t sustainable, and a correction could help avoid the “winner’s curse” of paying too much during a bidding war.
2. Geopolitical unrest, surprisingly, often benefits real estate markets because it drives investment towards stable, tangible assets like property.
For those frustrated by the low inventory in the market—like me, getting the itch to buy again every couple of years—it’s a challenge. The lack of quality properties means you need patience. But with economic factors like higher mortgage rates and a weak stock market, you might find better deals soon.
For those looking to invest more passively in real estate, platforms like Fundrise offer a way to get involved without the need to manage properties directly. They focus on single-family and multifamily rentals and allow you to start with a small investment.
Real estate is a solid choice for building wealth, especially in uncertain times. While tech stocks may falter, real estate typically holds its value, offering both functionality and income potential.
What do you think? Is now a great time to invest in real estate, or am I too biased? Have you used current economic conditions to your advantage in real estate negotiations? Let’s discuss more on this topic.
