The residential buy-to-let property market has proved to be a viable investment class over the years. However, since 2014, the property market has been very turbulent.
Many buy-to-let landlords continue to exit the market owing to the increased government taxes and stagnated yields. Also, the government has increased interest rates and reduced tax relief incentives for property investors.
It’s a jungle out there for investors, and as a result, buying property has been seen as a true test of the survival of the fittest. And this begs the question, “Is property a good investment in 2019?” Read on to discover.
Should You Invest in Property in 2019?
The answer is Yes if the property is good and the deal right. Buying an investment property in any given year can be lucrative if you:
- Exercise due diligence
- Negotiate hard on the purchase price
- Take your time
- Clearly evaluate the long-term aspects of the investment
While no one can tell with absolute certainty, how things will play out in 2019, a careful study of the housing market trends can give you valuable insights into what to expect. These marketing indicators will help you decide whether you should invest in real estate in 2019.
1. Housing Inventory
The housing market is subject to the market forces of demand and supply.
When there are fewer houses (low inventory levels), expect the prices to be higher since the demand is higher than the supply. When the number of homes for sale is high, the prices will go down because supply is typically more than the demand.
The good news is; inventory levels will remain low in 2019, making an investment in real estate desirable. However, homes are expected to increase in Boston, Seattle, and San Jose according to Forbes. To find where new home developments are located in Iowa, US, visit developingiowa.com.
2. Property Prices
Housing prices have been increasing steadily over the years, and this trend is expected to continue in 2019.
That’s bad news to investors. According to NAR, the national median existing-home price will increase by 3.1% in 2019 and the trend is expected to continue through 2020.
What does that mean?
If you’re considering purchasing a home now, you’ll only pay more if you continue waiting. For example, if a house is worth $200,000 now, you might buy it for $206,200 by the end of 2019 as the changes in prices take effect.
3. Mortgage Rates
The mortgage rates are on the rise. Over the past few years, the mortgage rates have been lower than they were during the recession, even below average considering the high economic growth the US has been experiencing.
However, the interest rates are expected to rise in 2019 all through 2020. Forbes projects that the 30-year fixed-rate mortgage might hit 5.8%.
What does this mean? The high mortgage rates might discourage people from buying homes. However, this might not be a deal breaker to those who survived the recession.
Before making the decision to buy property, it’s important to conduct due diligence to determine the viability of the investment. While buying property may be considered a solid investment by many people, some factors such as interest rates if overlooked can spoil the deal.