Ready to Invest in Real Estate?

By JACLYN LYONS | Special to the Palisadian-Post

If you’re ready to start delving into the world of real estate investing, then learning these new trends will be key in building a successful investment. While the real estate market has changed drastically over the last few years, due to the pandemic, like any type of investment, there are always trends that come and go.

One of the biggest changes recently is the change amongst iBuyers. iBuyers allow people to buy and sell homes on demand. They will offer your home for a price dictated by their algorithm, allowing you to then purchase another home before your home officially sells. If you’re unable to actually sell your home before closing on the new one, many of these companies will buy it themselves, hoping to turn it around and sell it shortly after. Many of these business models have shifted slightly, offering to also be a mortgage lender throughout the process. Building their business to be more by then adding a bridge loan for the down payment on the newly purchased home. This can be mutually beneficial and enable people to buy when they find something they love, even before their current home sells.

The second big trend on the uprise is interest rates. We all knew they wouldn’t stay low forever and we are seeing that come to fruition as they have been slowly rising since the start of 2022. After an all time low of under 3% during the height of the pandemic, the federal reserve had plans to raise mortgage rates at least three times throughout 2022, while also phasing out its bond buying program. Based on analysis and current trends, we anticipate mortgage rates of 2022 to be average around 3.5% for a 30 year term. In addition, the refinancing market may hit a market low, as people will stop refinancing once interest rates start climbing, forcing many lenders to turn to layoffs.

As mortgage rates start to climb back up, many interested buyers within the millennial and Gen Z generations will find themselves unable to purchase a home. The current appreciated value of homes has broken records and created a legendary climb for the 45 year old index, CoreLogic. In October, U.S. homes appreciated at an average value of 18%, while single family homes saw an average increase of 19.5% appreciated value.  These major increases came off continuous double digit trends for several years prior to the pandemic causing unsustainable growth. Three main factors go into home buying; the price of the home, interest rates and the total income of those buying the home. These have to get back into balance, or people will not be able to buy. As of right now, the U.S. has a shortage of 5.24 million homes; townhomes, condos, rentals and single family detached homes, which is where builders are currently placing their efforts to try to combat the next generations’ inability to own.

Jaclyn Lyons is a sales partner at Amalfi Estates, and she and her team have sold $2 billion in properties and were selected by the Wall Street Journal as one of the top 40 agents in the country out of one million agents. If you are thinking of buying a home or selling your own, contact Jaclyn Lyons at 860-539-9835 or jaclyn@amalfiestates.com.