Much like the stock market, the real estate market for most parts of the country have enjoyed the past five years. With a low interest rate environment, existing inventory in many metropolitan markets have been getting snapped up and you have seen new homebuilding occurring in cities and suburbs alike.
Although many people speculated interest rates were going to shoot up over the past several years, I personally believe that the cool off in the real estate market is excellent for homebuyers. If prices are starting to flatten out and interest rates still remain incredibly low, being able to borrow capital at a 4% interest for 30 years makes home ownership very attractive. You still need to remember to only buy what you can afford in your family budget and don't overextend yourself as home ownership usually comes with added bills and yearly maintenance.
Just like the stock market, it is hard to have a crystal ball to say when real estate prices will come to halt. If you bought real estate with the intent of selling it down the road, you need to assess what your exit strategy is going to be when you bought the real estate. I'm not talking about your primary residence because you are still going to have to live somewhere. I'm talking about the properties that you bought in the downturn and said to yourself, "If it hits this price, I'll sell." Now that the property has hit that price, are you ready to sell? Most sellers I have seen who are unsuccessful in real estate simply don't have a disciplined exit strategy. Figure out your price so you don't get your emotions stuck in the middle or otherwise you'll be biting your nails through the next real estate downturn.
Written by: Ted Jenkin
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