Hey guys! Sam here! We’re nearing the end of the first quarter of 2017! (Already, I know!) I got ton of new observation as to what the market is doing already in 2017. Lots of changes to the market and we’re already feeling to upward trend and the increased activity in the real estate market. Here are some couple highlights from Q1 and what’s to be expected throughout the rest of 2017.
1. THE TRUMP EFFECT
With a new president and a new administration, there comes a new set of policy to follow. Even in the stock market, we’re seeing the upward improvement as DOW closed with a very high points since the 08 crash. Overall, the investors across different markets are enthusiastic and optimistic. What does that mean to real estate? Well, with flurry of economic activity, we may have a large pool of demand for purchase of real estate. With already a small supply of housing, this can drive the prices to go up and it already has for the past 2 months. That being said, it’s a great time to consider fixing & flipping homes again and selling your rental property with lease options. Also a great time for builders and land developers to come back to create new supply of housing in some of the hot markets across the country. Now, there isn’t really a 100% confidence and it is still early in the timeframe for any real excitement but it is going to be a rewarding risk if you’re prepared.
2. The Interest Rate
The Federal Reserve has been talking about a rise of the interest rate for some time now. It can happen any day. Either be it tomorrow, next week or next month. But I expect it to happen before June of 2017. What does this mean? Well, it means that the cost of borrowing money is going to go up. When taking on a commercial loan, you may see a higher interest rate. Anywhere between 5-6%. The current average is about 4%. The higher interest can or may affect the prices of multifamily residential housing. BE AWARE of the balloon payment, especially since we may see a much higher interest rate in 3-4 years. That may have an impact on many 5+ multifamily unit properties.
3. IT’S BACK!
Just as the Terminator quote “I’ll be back”, the real estate market is definitely showing signs of major growth. Other experts even say that we’re back to the pre-08 conditions. Even for me, I’m seeing a greater demand for asking prices of the sellers that I encounter each day. But, we’re not quite at the peak yet. I believe we’re still building up where the real effect will be felt in 2020-2023. Still, the college student debt bubble is a wildcard as it may burst in the next 4-5 years. If that and when it happens, it WILL have an impact on the lending market again and it’ll slow down our current growth. So watch out!
A. The market is coming back and we’re going to see more of an upward trend.
B. The price of real estate is going up!
C. Great time to get into fixing and flipping again! But always focus on holding rental properties in case of another downturn.
D. Keep your eyes on the interest rate on loans!