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In the first half of 2023, only 14 of every 1,000 U.S. homes changed hands. That’s down from 19 out of every 1,000 during the same period in 2019 and represents the lowest share in at least a decade.
Needless to say, the housing market is experiencing a slowdown, leaving some prospective investors uncertain whether now is a good time to get into real estate. However, with the right strategy, you can make money in any market.
In this article, we’ll explore factors to consider before investing in real estate, market trends to watch, and which investment strategies these call for.
Factors to Consider Before Investing in Real Estate
Before investing in real estate, get your financial house in order. That means maintaining a steady income, building an emergency fund, reducing debt, and keeping a high credit score. The more financially secure you are, the better positioned you will be to buy (and secure financing for) an investment property.
Also, determine how much risk you’re willing to take on (i.e., your risk tolerance). Though real estate tends to be more stable than other investments, such as stocks, it still comes with risks. Being aware of these is crucial to making informed investment decisions.
Lastly, consider your investment goals: Are you looking for long-term appreciation, regular rental income, a quick profit, or some mix of the above? Your objectives will have a major impact on when and how you should invest.
The best time to get into real estate is when the right deal presents itself, and you’re in the financial position to take it. But the right deal will look different based on market conditions and trends.
Here are five factors to watch right now and how they might impact your investment strategy.
Market cycles
Real estate follows market cycles. On a macro level, these can be broken down into four phases: