Right time to invest in Housing Property
For long-term investors, the housing property is now looking as one of the best competitive options. 6-10 years back, when the property prices fell, investment in housing property was seen as value erosion. This has now been arrested and has since slowed down. In 2009 it had reached its bottom but since then we have seen consolidation and now it is expected to appreciate slowly and steadily.
On the safe side it is right to presume that a steady return can be expected from the housing market. Also, with prices still being in the lower zone it is the right time for the investors to put in their money. This is already happening and is indicative by the fact that in the past couple of years there has been rise in sale of residential properties. It is also very encouraging to notice that since 2012, international buyers/ investors have done substantial investment in property and this trend is on the rise.
Demand for US properties
There are basically four fundamental reasons for driving demand for residential properties and they are:-low prices the regular income in form of rent which is increasing year-on-year portfolio diversification makes sense and the last is good alternative compared to overpriced investment avenues such as stocks.The property prices had reached their peak in 2006. It was the end of a golden period where everyone was making a kill by investing in properties. It was followed by a three year period of slump and in 2009 the market hit its lowest price.
There was a small rise in 2010 due to multiple incentives by government and its agencies to prop up house prices. In present scenario, after few years of consolidation, finally, the housing property prices have gone higher than the 2010 levels, but they are still significantly below the high levels of 2006. During the period of fall in property market prices, it was observed that there was substantial boom in stocks, commodities and bonds market. Market experts say that at current levels the stocks are overpriced. Therefore, it makes sense to put our money in property market where the real estate prices have stayed low and subdued. For more details Visit our website
Some market pundits have predicted that real estate is set to rise soon at a much faster pace and it will try to catch up with the equity markets. The pace of rise is debatable and it may differ from one expert to another. Even if the pace is not fast enough, it is certain that a slow continued appreciation is agreed by all industry experts. In fact this likelihood of a rise in price has already fuelled some speculative interest.
Even if we don’t have substantial rise in price it is also important to note that the realty gets decent rates of return. Housing properties bought with no loan has a 4-5 percent ROR due to rentals. This return is net of taxes, insurance, other fees and expenses. And it is much better than what banks give on fixed deposits. It is said that we shouldn’t put all our eggs in one basket. The aim is to mitigate risk. Every investment has some sort of risk and has associated proportional return. Now depending upon one’s appetite of risk, we should plan our investment.
We can’t predict market, but what we can do is reduce risk by diversifying our investments in various schemes. Picking different investments with different rates of return will ensure that large gains in some areas will offset losses in other areas. Although we would love to invest in a sector which will give the best returns, but again at the cost of repeating we can’t predict the best performing sector because of the uncertainty in markets caused by market sentiments and uncertain political and global conditions. If we restrict our self to only one sector and because of reasons beyond our control that sector doesn’t do well, we may end up with complete wipe out. It is therefore prudent to diversify one’s investment in various sectors. And in present scenario of highly volatile stock and bond market and because of reasons stated above, the property market has emerged as a strong alternative investment avenue.