Why invest in real estate in 2022?
/
It's no secret, the real estate market has changed in the last few months. However, Colorado has seen extremely high appreciation rates over the last few years and even saw an 8% appreciation rate from January through June of this year. Although interest rates have risen, there are still many wealth building reasons to invest in real estate whether for your primary residence or for investment (rental) purposes.
Buyers are Finally Winning!
Yes, interest rates in 2022 are higher than we are accustomed to, but buyers are finally winning! Prior to the recent interest rate increases, buyers were having to compete against each other, often offering thousands over asking price, foregoing inspection objections, and insuring appraised value gap coverage. Now, with increased interest rates there is less competition, buyers are getting under contract with a minimum down payment, and in many cases under list price with seller paid closing costs or seller buydown of your interest rate! It is a good time to be a buyer and many asking prices are coming down which is creating a buyer’s market.
Worried about appreciation in the future? Let’s look to the past to review the trends. In the last 5 years, Colorado saw total appreciation of 65%. That means if you purchased a home 5 years ago for 350K it might be worth almost 580K today. Can you imagine earning 230K on any other type of investment in just 5 years? Compare this to the return on your 401K over the last 5 years. Eye opening! Even if we see a conservative 5-10% appreciation over the next few years, this is still a great return.
THE BOTTOM LINE:
If you are paying rent to a landlord you are losing money and paying your landlord’s mortgage payment and helping them build wealth rather than building your own wealth! Investing in real estate builds wealth over time, whether that simply means owning your primary residence and/or acquiring investment properties where renters pay your mortgage for you. If you’d like to explore mortgage rates/payments and the real estate market further contact John or Susan. Buyers are winning!
Both Susan and John have been named Five-Star Professionals again in 2022. Thank you all; we couldn’t have received this award without your support!
*Thank you to Laura Hebert of Prodigy Home Loans for contributing content to this newsletter!