Let me give you a weather update on whether it's the best time to invest in real property in the current pandemic state. But first, let us consider the factors that affect the real estate market in 2021. Recent records show that the US housing market hit the lowest level of inventory in nearly 40 years. Month's Supply of Inventory shows the sales volume of the number of homes currently available on the market and how long it would take for all of those homes to be purchased.
If you've seen the news then you are well aware of how nearly third of Americans are fleeing cities for lower cost homes and bigger living space. Especially with the new normal of working from home and online classes. People are buying homes in the suburbs now that Feds reduce their federal funds rate all the way down to nearly zero percent.
So if you are one of those who are looking closely at the market, you may notice that there isn't much in there anymore because of the home-buying frenzy. What’s the biggest reason behind this? Three words: Low Interest Rates. To help the economy recover from the recession, the Feds has cut the interest rates as low as they are going to go. This is to help millions of Americans severely cash-strapped and out of work.
When rates are down, homebuyers can afford more. With today's rates, people can afford $60,000 to $70,000 more and will pay the same monthly rate as if they bought a cheaper home. Home buying demand has increased so much to a record high. One survey shows that most of the buyers felt like it was the best time to buy because of how insanely low mortgage interest rates are. For example, take a mortgage of $300,00 at 3.7 % and it would cost you 1381 dollars a month with $925 per month going to interest but at 2.75% interest. That loan will now only be going to cost you 1216 dollars a month with only 675 dollars a month going towards interest. In simpler terms, the difference between 2.7% and 3.7% on a mortgage of $300,000 is that you get to keep extra $250 every single month. Sweet, isn't it?
Right now, lack of inventory is also a big issue. Sellers should take advantage of this and sell their property while the demand is still skyrocketing. You might be wondering weather we are experiencing a market bubble. However, economist believe that next year is going to be the same with real estate prices. The Federal Reserve announced that they will leave interest rates unchanged and until at least 2023. So this just goes to say that we’re unlikely to see much of a change anytime soon.
While everything may speak of opportunity in red capital letters, we would also need to consider other economists’ perspectives. An American economist, Michael R. Strain warns about the wave of foreclosures that may follow the housing market boom.
Read our guide on 'buying foreclosure properties'
About Us: We Buy California Houses for Cash buys houses across California. We pay cash which allows us to help homeowners that need to sell fast and/or can’t qualify for FHA financing. To learn more, visit us at https://www.webuycaliforniahousesforcash.com/
Read Realty Street guide on how to sell your house fast for cash in any market conditions