Home Values Will Decrease Making It More... on Property Guidance

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Home Values Will Decrease, Making It More Affordable for Buyers

By Bebuzee Admin
09, January 2024
797518 views

Home values are decreasing, making it an ideal time for buyers to invest in real estate. This article explores the reasons behind the decline in home values and what it means for buyers.

Introduction

The real estate market has seen a significant decline in home values over the past few years. This trend is a result of several factors, including the pandemic, economic downturn, and changing demographics. The decline in home values is good news for buyers as it makes homes more affordable, and they can now get more value for their money. In this article, we will explore the reasons behind the decrease in home values and what it means for potential buyers.

Why Are Home Values Decreasing?

Several factors have contributed to the decline in home values. Here are some of the most significant ones:

Economic Downturn

The economic downturn caused by the pandemic has had a severe impact on the real estate market. The job losses and business closures have resulted in a decrease in demand for homes, which has led to a decline in prices.

Changing Demographics

Changing demographics have also played a significant role in the decrease in home values. Millennials, who make up a significant portion of the home-buying population, are delaying homeownership due to financial constraints. Additionally, baby boomers, who make up a significant portion of homeowners, are downsizing and selling their homes.

Oversupply of Homes

Another factor contributing to the decrease in home values is the oversupply of homes. Home builders have been constructing more homes than the demand, leading to a surplus of inventory. This has given buyers more options and bargaining power, which has resulted in lower prices.

What Does It Mean for Buyers?

The decrease in home values is excellent news for buyers as it makes homeownership more accessible and affordable. Here are some ways in which it benefits potential buyers:

More Value for Money

Lower home values mean that buyers can get more value for their money. They can purchase a more significant property for the same price or buy a property in a more desirable location that was previously out of reach.

More Options

The oversupply of homes has given buyers more options to choose from. They can now take their time and select the home that meets their requirements without feeling rushed.

Bargaining Power

Buyers now have more bargaining power as there is less competition for homes. They can negotiate a better price or ask for additional concessions such as repairs, closing costs, or upgrades.

The Pros and Cons of Buying During a Market Downturn

While there are several advantages to buying during a market downturn, there are also some disadvantages to consider. Here are some of the pros and cons of buying during a market downturn:

Pros

Lower home prices
More value for money
More bargaining power
More options to choose from

Cons

Potentially lower quality homes
Potentially higher repair costs
Limited financing options
Uncertainty about the future of the market

FAQs

Q1. How long will the decrease in home values last?

A1. It is challenging to predict the length of the market downturn. Still, experts believe that the decrease in home values may continue for a few more years until the market stabilizes.

Q2. Should I wait for home values to decrease further before buying?

A2. It is challenging to time the market, and waiting for further decreases in home values may not be worth the risk. You should consider your financial situation, long-term goals, and personal preferences before making a decision.

Q3. Will I get a good return on investment if I buy a home now?

A3. The answer to this question depends on several factors, including the current state of the real estate market in your area, the condition and location of the property you're considering, and your long-term plans. In general, if you buy a home in an area with a strong real estate market, and the property is in good condition and a desirable location, you may see a good return on your investment over time. However, it's essential to consider your long-term plans and the costs associated with owning a home before making a decision.

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Categories Property

The Real Estate Market in January 2025: A Comprehensive Overview

21, January 2025

Understanding the Trends and Influences Shaping the Market

As we step into the New Year, the real estate market in January 2025 presents a fascinating tableau of trends and influences, reflecting broader economic conditions and demographic shifts. This month has already set the tone for what property buyers, sellers, and investors can expect in the coming months.

Market Trends

Housing Prices

January 2025 has seen a modest increase in housing prices across most urban areas, continuing the upward trend from the latter part of 2024. Factors contributing to this rise include ongoing demand for residential properties, coupled with limited supply. Major metropolitan regions like New York, Los Angeles, and Chicago have experienced notable price hikes, while smaller cities and rural areas have seen more moderate increases.

Interest Rates

The Federal Reserve's recent decision to maintain relatively low interest rates has sustained the affordability of mortgages, encouraging buyer activity. However, whispers of potential rate hikes later in the year have caused some buyers to expedite their purchasing decisions, adding a layer of urgency to the market.

Influences on the Market

Economic Conditions

The national economy has shown signs of steady growth, with low unemployment rates and rising wages contributing to consumer confidence. This economic stability has bolstered the real estate market, as more individuals and families feel financially secure enough to invest in property.

Demographic Shifts

Millennials, now entering their peak home-buying years, continue to drive demand for residential properties. This generational shift is particularly evident in suburban areas, where younger buyers are seeking affordable housing options with access to good schools and amenities. Additionally, the increasing trend of remote work has allowed more people to consider relocating away from expensive urban centers to more affordable regions.

Regional Insights

West Coast

California remains a hotspot for real estate activity, with cities like San Francisco and Los Angeles experiencing significant price surges. The tech industry's ongoing expansion in the Bay Area continues to attract high-income professionals, driving demand for luxury homes and high-end apartments. Meanwhile, more affordable areas in the Central Valley and Inland Empire are witnessing increased interest from buyers looking for cost-effective alternatives.

East Coast

New York City's real estate market has rebounded strongly from the pandemic-induced slump, with both residential and commercial properties showing robust performance. The city's appeal as a cultural and financial hub continues to draw investors and homebuyers alike. In contrast, smaller cities along the Eastern Seaboard, such as Raleigh and Charleston, offer attractive opportunities for those seeking a slower-paced lifestyle without sacrificing urban conveniences.

Midwest

The Midwest's real estate market remains stable, with cities like Chicago, Minneapolis, and Detroit witnessing steady growth. Affordable housing prices and strong job markets in these areas make them appealing destinations for both young professionals and families. Additionally, the region's focus on revitalizing urban centers has spurred interest in downtown properties and historic neighborhoods.

South

The Southern real estate market continues to thrive, driven by population growth and economic development. Cities such as Austin, Nashville, and Atlanta are experiencing rapid expansion, with new residential and commercial projects springing up to meet demand. The region's warm climate, lower cost of living, and business-friendly environment make it a magnet for both domestic and international buyers.

Challenges and Opportunities

Supply Constraints

One of the significant challenges facing the real estate market in January 2025 is the persistent supply constraints. The construction industry is grappling with labor shortages and rising material costs, which hinder the ability to meet the growing demand for new homes. This imbalance between supply and demand contributes to the upward pressure on housing prices.

Technological Advancements

On the flip side, technological advancements are presenting new opportunities in the real estate sector. The adoption of virtual reality (VR) and augmented reality (AR) technologies allows potential buyers to take virtual tours of properties from the comfort of their homes. Additionally, blockchain technology is streamlining the transaction process, making it more transparent and efficient.

Sustainability

Sustainability continues to be a crucial consideration for both developers and buyers. The demand for eco-friendly homes with energy-efficient features is on the rise, driven by increasing environmental awareness and the desire to reduce utility costs. Builders are incorporating sustainable practices and materials into new projects, catering to this growing market segment.

Looking Ahead

As we move further into 2025, several factors will shape the real estate market's trajectory. Potential changes in interest rates, evolving economic conditions, and demographic trends will all play a crucial role in determining market dynamics. For buyers, sellers, and investors, staying informed and adaptable will be key to navigating the ever-changing landscape of the real estate market.

In summary, January 2025 sets a promising yet complex stage for the real estate market. With rising prices, robust demand, and technological innovations, the sector is poised for continued growth. However, challenges such as supply constraints and economic uncertainties necessitate careful consideration and strategic planning. As always, those who can anticipate and adapt to these shifts will find the most success in the vibrant world of real estate.

By Bebuzee Team Read More

Buying Property Abroad 5 Crucial Questions to Ask Before Making an International Real Estate Investment

25, April 2023

What’s the crucial thing when making an investment? Simple! Protect your investment. Whether you’re buying stocks or putting money down on real estate? Whether you are buying property abroad or locally? Whether you are buying overseas property for investment or just looking to relocate? You need to recognize that there are risks. Heck, buying property abroad is like running a hurdle. You’re crossing hurdles like investment restriction laws, taxation, paperwork, exchange rate changes etc. Real estate investing comes at a risk, especially when you are going into relatively uncharted territories. You need to ask yourself some crucial questions.

1. WHY AM I BUYING THE PROPERTY?

Any decision you take subsequently will depend on this to an extent. Are you buying just to relocate or as an investor. You need to make up your mind. Your choice of mortgage, your budget and the type of insurance you go for would depend on this.

It’s easy to say I’ll move into the property for some time, get a feel of the place for a while then I’ll sell out when the market is steamy. Seems like a good strategy but guess what? Your guess may be wrong? You may have to stay with a property you don’t like for years or just bear the big loss. Hence you need to make up your mind beforehand. Am I relocating or investing?

2. HOW WILL I GET FINANCING?

Financing is a big deal when it comes to buying property abroad. You can’t just carry cash around, you need to select a reputable bank in your destination to deal with. If mortgages are available by the destination bank, you need to ascertain what types of mortgages are available and what contingencies. In a case where a deposit is required by your seller, make sure that an ‘opt out clause’ is signed to make sure your deposit will be returned in case the mortgage falls through.

3. SHOULD I BUY A NEW BUILD PROPERTY?

If you are buying a new construction or an off-plan property, be sure to choose the developer carefully. Ask a lot of questions. Initially, focus these questions on the agent or company itself, not the properties. Ask about customer testimonials and check what is included in their service. Ask for details in writing. You might be tempted to make a deposit on an attractive new-build property right away. Cool down and think before you leap.

4. WHAT ABOUT RENTAL YIELDS?

Property specialists caution against getting sucked in by claims of developers. ‘There is huge capital growth’, ‘rental yields are off the roof’ etc. Always remember: with big returns come big risks.

Don't just think about the profit to be made. Put some effort into your calculations and note that interest rates change over time, also include the tax implications of renting out your property abroad. You should consult a tax expert or lawyer.

5. WHAT WOULD BE THE ADDITIONAL COSTS?

Budget for extra costs to be between 8 - 10 % of the house value. This may often be far more in a few countries. Make sure you are, therefore, alert to the costs incurred for investing in a property in your selected country.

Whether you want to relocate abroad or create a global real estate investment portfolio, it's important to keep in mind that even the best strategies occasionally fall flat. You are going to therefore need an appropriate contingency plan and exit strategy, as this will lessen any inconvenience triggered and the prospect of financial loss. Hence, for those wanting to relocate, it is important to hold on to ties in your country of origin and ideally preserve a preexisting property for a predetermined time frame. Investors will also have to keep a keen eye on the global market and prevailing economic trends, as these factors may determine the necessity to sell or change strategy.

By Bebuzee Admin Read More

How to fund global real estate investing via equity funds

23, September 2023

This article offers practical steps on funding a foreign real estate purchase with equity funds.

Foreign real estate presents mouthwatering deals for investors with steep currency differences, especially in today's unstable financial markets; meaning you could have the upper negotiating edge in a neighboring country. The perk in currency strength is however not compensated for by the financial and legal aspects of sourcing funds for foreign real estate investing.

One financing approach which is gradually gaining traction is the use of equity funds. In this case, deploying liquidity of stocks and securities in foreign real estate capital.

There are four approaches you can take when planning to go this route:

1. Employ Equity REITs: Odds are you've heard about REITs and the huge tax rates at the individual investor level. A REIT is generally a stock that invests in real estate or real estate related securities, like mortgages. A mortgage REIT primarily lends cash to real estate buyers or acquires their existing mortgages. An equity REIT acquires, manages, builds, renovates and sells real estate, mostly commercial real estate.

If you don't want to be in the front line and would prefer to play it safe, REITs present a great way to achieve diversification via liquid investment in real estate. Many international REITs have sprung up over the years. So, investing in foreign real estate should be as simple as locating a good REIT that invests in your country of choice or simply using REIT ETFs. However, don't ignore the fact that REITs come with tax liabilities that can range from 15% to 35% of profit. This is compensated for in a way by tax exemption at the corporate level, as long as 90% of income is distributed to unitholders.

2. Self-directed IRA or Offshore IRA: As much as we wish to help you with country-specific information, you should know that real estate laws aren't invariably the same in any two countries. Hence the importance of having a local mortgage expert or real estate agent (read how to find the right local real estate agent) who can help you with local professional information.

For US residents, using funds from your retirement account or 401k is a great way to employ equity funds for foreign investing. The IRS doesn't restrict holding real estate with your IRA. However, according to an article on Supermoney.com, (https://www.supermoney.com/2017/04/finance-overseas-property/), you won't be able to live in the property until you reach retirement age. In any case, you will need to either set up a self-directed IRA, which allows you to invest in overseas real estate via a third party or broker. Alternatively, you can set up an offshore IRA as a way to gain more control, by taking your self-directed IRA offshore. In this case, you move your self-directed IRA into an offshore Limited Liability company. Setting up an offshore IRA can, however, be costly.

3. Stock Market Liquidity: You can employ liquidity on your stock market investment or securities, subject to tax, by selling your holdings. This presents you with cash to invest directly in foreign real estate.

4. HELOC (Home Equity Line of Credit): For home buyers in countries like the USA and Australia, a HELOC allows you to take a loan on an existing home by cashing on real estate equity.

Buying real estate with equity funds is completely legal and carries no extra charges or taxes. However, ensure you report financial proceedings to necessary financial authorities in your home country.

Also, if you're either buying overseas real estate for investment or personal use, reach out to a local real estate agent that can offer market-specific information about taxes for your destination country.