The Time To Buy Your Next Investment Property Is Now

HERE’S WHY WAITING FOR THE MARKET TO CHANGE IS A LOSING STRATEGY

It’s been over two full years since the Federal Reserve began increasing interest rates in an effort to slow inflation. It’s been over a year (July 26, 2023) since they’ve increased those rates any further. Inflation has slowed and interest rates have held. Housing prices, however, have also held steady and in many areas, continue to rise. This isn’t good news if you’re looking to invest in real estate. Despite efforts by the government to tinker in the market, there simply is not enough supply out there to bring prices down. That means lots of investors are standing on the sidelines waiting…So the question is…what are you waiting for?

SUPPLY

The housing supply simply cannot keep up with demand. After the housing collapse in 2008, construction dropped precipitously. The solutions to this issue are multifold and not something we’re going to dive into here, but it’s important to cement this fact: there simply isn’t enough housing to feed the appetite of Americans who want to buy houses, be it for their own residence or as an investment. Are you going to wait for more houses to be built? You’re going to be waiting a long time.

LEARN MORE: INSURANCE PREMIUMS ARE OUT OF CONTROL!!!

DEMAND

Here’s where relying on the experts is most misleading. So many investors we talk to get into what they’ve heard about housing price trends and the latest talking head or article that’s predicted the market is finally turning. We are not telling you the market is turning. What we are telling you is that the market and market conditions have been relatively consistent for over a year. There are more houses being built than in years past, but there’s going to be a long lag in terms of catching up…they simply can’t build (and get through legislative red tape) quickly enough. So what other variable is there?

LEARN MORE: REALISTIC EXPECTATIONS FOR NEW LANDLORDS

DEMAND (Part 2):

The major variable that is not often discussed is the amount of buyers vs. the potential number of buyers. Think about it…there are thousands of potential buyers just waiting for interest rates or prices to come down. And what’s going to happen when they do? The number of competitors out there is going to skyrocket. So sure, interest rates or prices may seemingly come down triggering what seems like a good time to buy, but now sellers have three or four times as many interested buyers, and what inevitably happens to prices?

As long as supply lags, prices are going to be high. And as soon as those prices start to turn, they’re going to head right back up. Your best bet is to get in now while there’s less competition. Although you’re reading that competition is high, it’s nothing compared to the larger amount of potential buyers that are standing by the sides of the gymnasium waiting for the right time to ask their crush to dance. You may not get the price you’d like, but you have a better chance of getting the home you want if you start now. If you’re waiting for the market to change, you’re going to have to wait for longer to get that dance.

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Mick Lefort is the General Manager of Nexus' New Haven County Franchise Office and the Vice President of Operations for Nexus Property Management®, a National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.

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