Is Real Estate Still a Good Investment In 2022?

Is Real Estate Still a Good Investment In 2022?

FINSMES

 

Is Real Estate Still a Good Investment In 2022?

Real estate has always been considered a good long-term investment. This is because house prices have a tendency to rise over the long term. These rises also tend to be greater than inflation, meaning that you are actually making money.

However, the world, and global markets, have been rocked by the pandemic that stretched across the globe. It has hit several industries hard, you’re right to be cautious about investing.

The good news is that the price of property appears to be continuing to rise. Records show property prices jumped 22% in 2021!

However, before you can make money from real estate, you’re going to need to invest money. That means you need to be certain about what you are doing. It’s difficult to invest in real estate without any risk unless you are lucky enough to win the home lottery, that’s definitely worth trying.

There are several things you need to be aware of before you decide whether to invest in real estate in 2022.

Prices Are High

Thanks to the boom in prices in 2021 you’re entering a market that is enjoying high prices. That’s great if you’re a seller. But, if you’re looking to buy you will be paying more than you would have done for the same property a year or so ago.

While this can seem positive as you want the prices to rise, you need to remember that 2021 saw the biggest price increase in real estate for 20 years. In short, there is no guarantee that prices will rise in the same way.

That means investing is likely to be a safe bet if you’re in it for the long term. But, if you want to invest in order to create a profit this year, you’ll need to proceed with caution, after such a big rise in values it is possible the housing market will crash.

Interest Rates

Interest rates have stayed low for many years. This means you won’t have to pay a huge sum to borrow the capital you need for your real estate investment.

There is no guarantee that interest rates will remain low, especially as the world recovers from the pandemic. That makes 2022 a good year to invest in real estate and take advantage of the low rates before they change. 

Rental Demand

The pandemic forced many people out of their homes. These people will be looking for new places to live and, if you’re looking at investing in real estate property to rent, you will find there are plenty of candidates waiting to use your property.

That will make it easier to cover your costs and even start making a profit at the beginning.

Uncertainty

However, before you jump into real estate it is important to assess all the risks. The pandemic has changed many people’s approach to life. That means the traditional living arrangements could be changing. While property is still essential for everyone and real estate is a good investment opportunity, make sure you understand what the people in your area want and focus on investing in that type of property.

Source: finsmes.com

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Should I Wait For Housing To Crash Further Before I Buy A House? 3 Reasons The End of 2022 Could Be The Very Best Time To Jump In

Prices falling in expensive cities

In two-thirds of major regional housing markets — 98 out of 148 — prices continue to drop, especially in more expensive locations.

We may see expensive markets fall further, which if that happens sooner than later, would make it an excellent time to buy into an expensive market. This wouldn’t have registered as a possibility even a few months back.

It’s difficult to predict if this will happen. And if so, whether falling prices become offset by the federal interest rate hikes practically certain to arrive in the coming months.

The only way to know for sure is to wait until the latest rate hike sets in.

Meanwhile, keep in mind that — as with any investment — it’s best time to buy is usually when prices are low.

‘Deals to be had:’ Homebuyers Should Ask For These Incentives While They Have The Upper Hand

The days of waiving contingencies such as appraisals and forgoing inspections are fading into the rearview mirror. Still, contract activity remains slightly competitive depending on your location.

At least 24% of buyers waived the inspection contingency in December 2022, according to the National Association of Realtors confidence survey, up from 16% a month prior and 19% one year ago. An additional 24% of buyers waived an appraisal contingency in December, up slightly from 16% in November and 21% a year ago.

Home inspection contingencies are particularly important because it can let you know if there’s a deal-breaking issue with the property before a purchase occurs. It can also help you negotiate repairs with the seller, which is becoming increasingly common in today’s market.

“If buyers have this short window to buy where they can get incentives to purchase, [they] would rather buy where they have an opportunity to really think about it, get an inspection, a financing contingency and not feel rushed,” Jeff Reynolds, broker at Compass and founder of UrbanCondoSpaces.com, told Yahoo Finance.