Why investors may want to avoid these markets
One might think that a significant increase in house prices would be an attraction for real estate investors. But in much of the country, home prices are on the rise due to a basic formula: low inventory coupled with high demand.
Although mortgage rates have recently started to climb, during the second half of 2020, they sat at or near their all-time lows. At the same time, the housing stock was extremely slow as homeowners delayed listing their homes due to the pandemic and general economic uncertainty. Buyers, in an effort to take advantage of low rates, crowded the limited market, pushing up home prices. As such, home prices in the above subways may not reflect actual value, but rather the artificial value that tends to ensue in a tight housing market.
In a more normal real estate market, the growth in house prices is a good indicator for investors to follow. But in today’s market, it’s downright unreliable. And investors trying to buy in the subways listed above may find that home values begin to drop rapidly once stocks hit the market and buyer demand begins to decline. Considering the trend in mortgage rates over the past month, this latter possibility is quite possible.
Millionacres net profit
Of course, this begs the question: what is is a good market to focus on in the close team? It’s hard to say, given that house values are inflated at all levels. In fact, the inventors who examine income properties or house flips may want to sit still for a few months and see if an influx of spring listings helps the market calm down. This strategy works well for house swimmers especially, those who don’t tend to rely on the mortgage. funding buy houses and will not be as affected if interest rate on mortgage loans continue to rise.