Why Property Investment Could Be The Smart Option In 2016
I noted in last week's blog that 2016 has already been a year to remember, or should I say one to forget so far, for many investors.
We continue to see volatility and turmoil in stock markets on a daily basis, plus a range of other major concerns in investors' minds.
Against such a troubled backcloth, real estate is likely to be even more widely perceived as a very solid long term safe haven investment in the coming weeks and months, just as it almost always has when these situations have arisen in the past.
Indeed, even before the current stock market troubles started on the first working day of the year, property looked like a stunningly attractive option. Right now it arguably looks downright irresistible!
For many investors, a property portfolio facilitates the development of a passive income stream and it would be entirely true to say that what is bad news for renters right now is precisely the opposite for landlords.
As I mentioned at the tail end of last year, the Harvard Joint Centre for Housing Studies and Enterprise Community Partners has predicted that the number of households that spend half or more of their income on rent will rise by at least 11% from 11.8 million to 13.1 million by 2025! A CNN article almost simultaneously suggested that rents are expected to rise faster than inflation in 2016, increasing by around 3%-5% nationally.
These statistics are, of course, being fueled by increasing demand from renters.
Not everyone can afford or qualify for a home loan and, despite some evidence of a slight loosening in requirements, lenders still adhere to very strict criteria before they will approve a mortgage. As Federal Reserve interest rates are likely to gradually rise in 2016, home purchase could be more expensive, even if home prices and mortgage rates stand still, preventing ownership for those in very marginal circumstances.
The other news that should be motivating investors right now is that, in spite of low inventory of available properties in this area and rising prices, they are increasing in a steady, rather than dramatic, manner. It's therefore perfectly possible to identify well priced and located property with excellent rental potential that can potentially realize a virtually instant return on investment, also remembering that this year is expected to see the best 12 months in real estate for over a decade!
And if you need to borrow money to help build your portfolio, mortgage rates remain nicely pinned under an average of 4% for a 30 year home loan, for example, with a series of small percentage point falls every week since the current stock market crisis sparked a greater interest in bonds, a factor that tends to inform mortgage rates more than any other.
No matter what your individual property investment goals are this year, you'll benefit by partnering with a realtor with vast experience in property investment. With less inventory out there, it's important that you have a professional on your side with up to the minute knowledge of every listing in the area and the appropriate skill to identify good matches to your individual needs and preferences. Why not call us today for an initial and informal chat.