Buying Real Estate

Pros and Cons: Real Estate Investments

There are always reasons to buy or not to buy real estate. Let’s look at the reasons to buy and not and then look at some market predictions that may help you make solid buying (and selling) decisions.

Eight Reasons to Buy according to “Market Watch”

1 Homes are a relatively “safe” investment over the long term because home prices usually appreciate over time.

2 Millennials need a place to raise their families.

3 Rents are high…hime owners get a return on investment.

4 Flipping older properties continues to create strong returns.

5 Real property is less risky than other investments…unless you get over leveraged.

6 The economy appears steady.

7 Foreigners, particularly Canadians and Chinese, are eager to own US properties.

8 Bankrupt buyers from the financial crisis are now over their 7 year required wait time to get into the market again.

Eight Reasons Not To Buy According to “Market Watch”

1 There is more to the story besides the home inspection report

2 There could be hidden or unpredictable damage or repairs

3 Murphy’s Law applies to real estate just as it applies to everything else. “Anything that can go wrong will go wrong.”

4 Patch repairs don’t work or last forever.

5 No warranties or information about houses coming out of foreclosure. Even new construction warranties may not apply.

6 More liquidity and diversification in stocks than in real estate investments unless you can own lots of properties in lots of locations.

7 Even if you’re not a DIYer, there’s less work involved with stocks.

8 There are fewer fees and taxes involved with stocks.

Here are a few predictions about the housing market from experts.

1 Freddie Mac predicts a “good” 2018 with a solid +5% price growth.

2 The National Association of REALTORS® predicts flat sales in 2018, according to NAR’s vice president of research, Paul Bishop.

3 CoreLogic expects 2018 prices to grow 4.3% by the end of 2018 plus

Home appreciation +3.2%

Mortgage interest rate average 4.6% now increasing to 5% at end of 2018

Existing home sales +2.5% due to low inventory easing

Housing starts +3% in home building; +7% in houses

New home sales +11%

Homeownership rate – stabilizing at 63.9

4 With cost of living rising, workers and businesses in San Francisco, San Jose, Seattle and Miami may migrate to cheaper cities such as Philadelphia, Houston and San Antonio.