Things feel uncertain right now in more ways than one. And this is showing in the real estate market, too.
For example, one investment property of mine is increasing in value – market reports for that neighborhood show that similar homes nearby are selling for much higher than they were last year and that property prices are increasing.
Another investment property about 2 miles south of the other one is in a market that is cooling off a little. That means similar homes in that neighborhood aren’t selling for much more than they were last year.
I’m also always looking at real estate throughout my city in the markets I keep an eye on to understand the broader real estate market. I’m seeing a few key things:
- High price tag homes don’t seem to be lagging in sales – homes in nice neighborhoods that are priced at or about $1MM seem to be going on and off the market just as fast as before.
- Investment properties are still hot – multi unit buildings are still selling. Investors like me have been waiting for downturns in the market like this to buy a larger property in a more expensive neighborhood, and investor activity is apparent in the market I live in.
- Smaller, single unit homes seem hit the hardest – family homes are staying on the market longer. My guess here is that those hit hardest by the pandemic are not buying starter homes, which is cooling off the mid to low range single family home market in my city.
Some other key things I’m seeing:
- Buyers have more bargaining power now. This is definitely moving to be a buyer’s market, and I’m watching friends as well as listings I’m following sell for way below asking price.
- Idea: now might be a great time to buy your first property or step into multi-unit property investment for the first time. You also have more bargaining power with the seller to ask for repairs and updates in your contract.
- Renters are staying in place. Due to pauses in evictions as well as uncertainty about quarantining, renters are staying in their current leases as much as possible.
- Idea: If the end of a lease is coming up for a current renter, consider not increasing rent right now to entice them to re-sign and keep your turnover at a minimum for your health and theirs.
- Rents are decreasing to attract tenants. Because of the previous point, I’m watching a lot of multi-unit buildings offer ‘first month free’ type deals to attract tenants.
- Idea: Now could be a great time to get competitive with large complexes in your neighborhood by offering lower rent. Because you don’t want to get trapped in a low rent lease, consider a short term lease (6 months) and be transparent with the tenants that rent will increase after the short lease is over if they choose to sign again.