It's Time to Make Your Move
Why Real Estate Now?!?!?
Whenever we hear the word recession, I think the first reaction is to think back to 2008 and scream to the world, "Get out of real estate it is crashing!!" Yes, that is what happened in the great recession. We watched real estate values plummet, and yes, real estate was the major reason for the recession. But, if you take a look at every other recession in our nation's history, real estate has always done well. Even in the last recession, if you purchased real estate after 2009, you made a good investment.
I have had many clients calling over the last few months asking me when they should buy and how low can they start throwing offers in. My answer is very simple, buy now and hope and pray you get it for list price. We have not entered a market where "low balling" is going to work. The fundamentals of a solid real estate market are still in place. We have a low supply of inventory. We have a large supply of buyers. We also have the lowest interest rates EVER seen in the history of the real estate market. The month of May is proving to be one of the best months ever in real estate and it looks like June may be even better.
The majority of my personal clients are investors. Many are a little concerned the prices of homes/investment properties are getting too high. They all ask the same question, "When should I buy?" My response to that is a question "What are the fundamentals of real estate?" As an investor the fundamentals are: 1. Does my property cash flow? 2. Am I buying in a location that is recession proof? The first question is easy to figure out. The second one is a little more complicated. A great test for this is to ask the question, am I investing in an area that has "High Risk" jobs or "Low Risk" jobs? Let me break this down for you a little more.
High Risk Jobs: These are jobs that are in the entertainment/service industry. This means the majority of jobs in your area focus on entertainment like gambling, concerts, amusement parks or heavily on the service industry like hospitality (AirBNB, VRBO, hotel/motel) food industry, cleaning services. All of these jobs depend on the economy to be doing well and people being able and willing to spend extra money. These are the jobs that have been most affected by the recent pandemic.
Low Risk Jobs: These are jobs that are going to be safe regardless of what is happening with the economy. Normally these are government jobs, other areas include needed professional services, and jobs required for our basic needs/comforts. Examples of these would be working for the power company or sanitary services. No job is a guarantee to have and is always at risk, but the areas above have proven to be secure for most.
So, my answer for today's investor is look for areas that are a happy medium of not too many high risk jobs and not too many low risk jobs. Pricing should stay stable for a few years. You should be able to consistently find tenants. Overall your investment should be able to grow and net a decent return over time. Take advantage of today's interest rate and use that to build a solid portfolio of diverse investment properties.
Now for the majority of people that my agents deal with and the majority of the general public looking for a home. I know many of you are asking the same question. When should I buy or sell my house? My answer here is also simple. Now is the time. The fundamentals of real estate are still the same. Know what you are looking for in a home and take advantage of the never before seen low interest rates. Make sure the home you are buying checks all the boxes you are looking for. Make sure you tell your professional real estate advisor what is important to you in a home and let them do the work. Almost as important as finding the right home is finding the real estate advisor that works best for you.