Prospective real estate investors who are pondering whether the time is right to enter the market should consider the June 2017 report issued by the National Association of Realtors on existing home sales. The seasonally adjusted annual rate stood at 5.62 million, higher than the consensus and 1.1 percent higher than the previous year.
In addition to higher real estate sales across the United States, housing supply fell to 8.4 percent on an annual basis, which means that demand is at very high levels. Furthermore, the Mortgage Bankers Association reported an increase of 0.6 percent for overall applications and a slight decrease of average interest rates.
The Housing Market and the National Economy
The American economy is highly dependent on the health of its housing market. According to statistics compiled by the National Association of Home Builders, the combined contribution of the residential real estate market to the gross domestic product averages between 15 and 18 percent . In the first quarter of 2017 alone, residential fixed investments combined with expenditures of housing services totaled more than four trillion dollars.
Sizzling Regional Markets
As can be expected, some markets are hotter than others. Phoenix, for example, is an example of a key housing market that prospective investors should follow. Overall residential sales in Phoenix were higher than nine percent on an annual basis in May, and the inventory is depleting faster. Prices are up 7.1 percent on a year-to-date basis, and the average monthly increase is 1.7 percent.
What Home Builders Think
Since 2016 was an election year, home builders adopted a waiting stance to check for what a new economic stimulus plan may look like, but it seems as if they are no longer waiting around.
Shortly before the Existing Home Sales report indicated the falling inventories, home builder stocks on Wall Street appreciated to record trading levels as executives declared that they were trying to solve staffing problems preventing them from building at a faster pace. The confidence among builders is pretty strong as sellers prepare to adjust their prices in light of increased demand.
What It Takes to Enter the Housing Market
Similar to Wall Street, entering the housing market is not a matter of timing it. In the 21st century, markets are constant; what matters is being able to take a good position. As explained above, home builders are already in a good position that will improve with better staffing practices.
In a seller's market such as the one being experienced in 2017, one of the best positions to take is that of a property investor who seeks for value opportunities that can be upgraded for significant profit. To find success, it takes a good understanding of the market cycles and the conditions that dictate them.
Education is Key in the Housing Market
Entering the housing market without experience or adequate training is not recommended. Similar to trading on Wall Street, success in the housing market comes to those who have a proper strategy. Investors who fail to do their homework before they enter the market run a very high risk of making mistakes. Be sure to investigate any real estate courses or training you are considering, such as by reading Success Path reviews . Research is paramount in real estate; there are various paths that investors can follow from wholesaling to upgrading existing homes.
In the end, the time to enter the American real estate market is currently optimal for prospective investors who are willing to learn and put in the necessary work. The days of the housing bubble and the subprime mortgages scandal are over; the current market conditions are positive thanks to improved safeguards applied by regulators over the last few years.
Anica is a professional content and copywriter from San Francisco, California. She loves dogs, the ocean, and anything outdoor-related. She was raised in a big family, so she's used to putting things to a vote. Also, cartwheels are her specialty. You can connect with Anica here .