Co-founder of the world’s largest real estate brokerage Gary Keller has been calling a shift in the market for some time. Recent data may suggest that shift from a seller’s market to a buyer’s market is already here — at least in some destinations. What does that mean for owners and real estate investors?
Data from The Wall Street Journal and National Association of Realtors shows that U.S. home sales began falling in July 2016. New statistics from RealtyTrac in September 2016 show that the average time to flip a home has extended to a new dramatic high of over 6 months. Additionally, vacant bank-owned properties have risen by 67% in 2016.
Many homeowners may need to step up their game to sell faster, though obviously a “buyer’s” market also signals a time for others to step up their investments or hold.
Is it Time for You to Sell Your Home?
If you really must sell your home in the next few years, have been hoping to move up, or may have a balloon mortgage or adjustable rate mortgage; this is high time to sell in many markets. Rising interest rates and softer sales could make this the best time to exit in the years ahead.
For regular homeowners, that may be a big wake-up call to get it listed or to cut the price on a listing to make sure you secure a sale.
As a real estate investor, you may also want to capitalize on this moment to optimize and restructure your portfolio. Maybe you have four single families you can sell and use those proceeds (via 1031 exchange preferably) as a down payment on a 100-unit multifamily building. Maybe you have held some properties for quite a while or have an aging multifamily and now is the time to liquidate and buy something recently remodeled.
When It’s Time to Hold
Don’t sell if your cash flow makes sense and your location still has room for growth. There may be small soft spots in the market, but real estate has proven to keep going up in the long run. Also, if you don’t have plans to reinvest or can’t see opportunities with better yields, then it’s best to simply not sell. Paying Uncle Sam on those capital gains can be a hard pill to swallow. So don’t sell unless you are really facing pressure to in the next few years.
Most investors will want to use this period to bulk up their income property portfolios, taking advantage of low rates and the few destinations that may still be undervalued and overlooked by the masses.
What do YOU think about current market conditions?
Let me know with a comment!