4 Factors Impacting The Market Now
What do real estate investors need to know now for mastering the market?
There have been and continue to be some notable changes around the finance and property market. Staying alert to what these mean is important. Some may be obvious to you, others require stepping out of the weeds for a moment and taking a big picture view.
Selling Real Estate
Rising property prices from a recent shift in the population and in demand property types has many sellers and property owners feeling over confident. This applies equally to investors as it does for regular homeowners.
Just as many homeowners dragged their feet selling in the run up to 2008 and continue to swear Obama was going to personally bail them out, we are facing similar circumstances now. Sellers held on, often in default, dreaming they would be saved. All while their property values actually crashed, and they ended up running out of options and losing their homes.
Some properties are going up in value fast. Others are actually crashing already. More of this diverging trend will be seen next year. Waiting to sell can be a huge and tragic mistake.
This is especially true when sellers could be cashing out with a nice amount of equity, instead of waiting and losing tens and hundreds of thousands of dollars. Many sellers are already offering owner finance deals, but are asking for outsized down payments. After having already marketed their property for a year, they face negative equity positions, and have lost thousands in potential monthly payments, all for the sake of not lowering the down payment ask. Don’t be one of them.
There are two solutions for investors trying to help these owners and acquire these properties. Verbally arguing with them over their misconceptions of the market isn’t likely to help make a deal. So, one solution is using more online content to educate these sellers on the current market, threats and what terms they should be asking for. The other is to simply focus on those sellers who have already decided to sell and are being more realistic.
Taxes Rising
Taxes are almost certain to rise in 2021. The new administration has promised a slew of new taxes. Expect federal and state income taxes, property taxes, investment income taxes and more to rise. As an investor you must get ahead of this curve with new strategies.
Rising Bank Fees
Banks have already been slashing credit limits and hiking fees. Most notably on those who need help the most and are in the tightest financial positions. Expect this to continue to cause a deterioration in credit quality. Keep this in mind for adjusting criteria for renters and seller financed buyers. As well as when expecting to sell to borrowers getting a mortgage.
The Next Pandemic
Bill Gates who predicted the coronavirus pandemic has now forecast another global pandemic is quite likely to happen in the next few years. It may be three years or 10 years away, but it is probably going to happen. That may come just as we’ve wrestled our way through the coming second and third waves of COVID-19. Consider the impact that will have on what property is in demand, and not.
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