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Is Now a Good Time to Invest in Real Estate?

Written by Posted On Tuesday, 25 July 2017 11:34
Is Now a Good Time to Invest in Real Estate? Pixabay

Following the Great Recession and the housing crash of the early 2000s, investors have become quite wary of investing in real estate. Nevertheless, the question occasionally presents itself to prospective buyers: is now a good time to invest in real estate?

It’s understandable that buyers are exercising caution. The housing bubble of the last decade left both homeowners and real estate investors in dire straits. But in the ten years which have followed, the United States has seen 200% gains in the recovery. As it turns out, 2017 may be one of the best times to invest in real estate. Here’s why.

We’re not in a bubble

To the contrary, the United States real estate market is actually quite healthy.  It all boils down to supply and demand. Pre-Recession, the US saw a huge increase in the availability of homes. There was a sort of perfect storm which led up to the subsequent crash, and factors from television advertising and the burst of the dot com bubble to subprime lenders were cited for the fall.

Today, the United States housing market is a healthy mix of supply and demand; yes, interest rates are rising, but foreclosure rates are at the lowest they’ve been in almost 20 years.

Millennials are spending their money

Say what you will about millennials, they’re driving the market. Millennials just became the largest age group of individuals in the United States. As they continue to grow their net worth, they’ll be responsible for not only shifting the economy, but shaping the future of investing.

Now, consider what these millennials have witnessed. Over the span of most of their lives, they’ve seen real estate outperform the stock market. In fact, the real estate market performed twice as well as the S&P 500 from 2000 to 2016.

Needless to say, the millennials are more excited about real estate investment than have been previous generations. And because they’ll so heavily influence the economy, real estate investment is looking bright.

Alternatives to real estate investment

While those millennials have seen great growth in the real estate market, that’s not to say that the stock market hasn’t performed well in the same time. Since 2000, the S&P 500 has yielded almost 5 ½% annual total return. That said, the stock market is still a promising bet for investors.

Should you decide that you’re not quite ready to embrace real estate as a part of your portfolio, you have options within the stock market. There are benefits to this, as well. While the stock market is temperamental, it’s relatively low maintenance. Real estate is not.

And just as the stock market has associated risks, real estate investment carries its own dangers. A consistent income isn’t guaranteed with real estate, and as it’s a tangible good, there are other opportunities for loss.

Ultimately, where you invest is your choice. But it’s important for investors to research both options fairly. While the real estate scare a decade ago was quite real, the market has greatly improved, making real estate a viable, even promising, investment.

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Michael is an investor with a small property empire. He writes for FreelanceWithUs.com and well as other writing, business and real estate blogs. He also owns his own careers website, NorthCentralCareers, where he advises on top jobs. Get in touch to learn more.

https://northcentralcareers.com

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