Is Now A Good Time To Invest In Real Estate? (2022)

The pandemic hasn’t had that much of a negative impact on the real estate market. According to a report by CNBC, home sales have risen more than 22% in the past two years.

Because of this, many individuals are thinking about diving into the world of real estate because they feel safe that it’s the safest way for them to invest their money right now.

I can tell you that there’s a lot more to being successful than just having the drive to do so, as real estate always seems to be changing, and it can take a while to see a return on your investment.

I have learned though that if you are patient, then you really can make a lot of money.

So Is Now A Good Time To Invest In Real Estate?

I’m going to use my 12+ years of experience to give you a little bit of insight about what I think is going on with the real estate market right now and whether or not it’s a good time to invest in it.

You can use all of this information to decide whether or not you think 2021 is the time for you to invest in real estate.

  • The Housing Market Conditions This Year

In addition to home sales being up, so are home prices by close to 12% according to Market Watch. A lot of this has to do with supply-and-demand.

There isn’t as much inventory as there has been in year’s past. Interest rates are fairly low right now, so many individuals are jumping on this and snatching up homes as soon as they are listed.

Unfortunately, this means that a lot of investment properties have risen in price as well. This has caused real estate investors to have to pay a lot more for properties than they are used to.

Many of them are trying to flip properties as quickly as possible as they don’t want to risk holding onto them for too long and not being able to sell them for as much as they’d like to in order to make a profit.

It’s not uncommon for new listings to go under contract within a day or two. One thing that I’ve seen that’s surprising is the amount of offers that are well over the asking price.

Because inventory is so low, many buyers are willing to offer $40,000, $50,000 or even more over asking price just to get the house that they want. They are also willing to waive inspections and overlook things that buyers normally wouldn’t in markets where there’s more inventory.

This is a great market for those that are cash buyers.

Many homeowners are getting over 15 offers on their house. Because they don’t want to risk choosing a buyer that isn’t able to secure financing, they often end up choosing the individual with the highest cash offer rather than the buyer that only has a 3.5% down payment.

What It Takes To Buy Real Estate In 2021

Recently, I’ve had quite a few people ask me whether or not I think it’s a good time to buy real estate.

I will tell you that it’s an extremely tough time to buy.

Homes are selling for a lot more than they did even just last year, and there are so many offers on each home that it’s really hard to actually find and buy a home for a price that you can afford.

You probably won’t find anything that’s under the current market value right now. You have to be persistent and not give up when a seller doesn’t accept your offer.

All of this can be very discouraging even for those of us that have been doing this for a while.

  • Why Low Interest Rates Matter To Cash Buyers That Want To Flip A Home

Many investors are buying homes because of low interest rates. This can make it confusing to those that have never invested in a home before because they think that the low interest rates don’t really matter because home prices are so high.

For cash buyers, the interest rates aren’t important to them during the home-buying process, but it will matter to them during the selling process.

Here’s why:

Because interest rates are so low, we are seeing more buyers than we have in previous years. This is a good thing for investors. Currently, many buyers are going into bidding wars in order to buy a house because they don’t mind paying more for a home because they are getting a loan with a low interest rate.

This is an example of why interest rates matter:

  • $200,000 loan with a 3% interest rate = $843.21 monthly payment
  • $200,000 loan with a 5% interest rate = $1073.64

As you can see, a lower interest rate can save a buyer thousands of dollars in interest over the life of the loan. This is why many individuals are trying to buy a home right now and the main cause of the shortage of properties available.

For those investors that are able to flip a home while the rates are still this low, they will probably have no problem selling the property quickly.

  • Buying An Investment Home With The Intention Of Renting It

Not all real estate investors buy a home just to fix it up and flip it. Many individuals are interested in regular income and purchase homes so that they can rent them out.

However, they do need to be very selective about the properties that they purchase right now. Because houses are priced so high, it can take them many years of collecting rent before they’ve actually made a profit on their property.

They also have to factor in things like home repairs, property taxes and insurance or times where the property just sits empty because there are too many rentals on the market.

Right now, I am seeing a shortage of certain rental properties as well. This is good for real estate investors, but they also need to realize that we have seen a lot of fluctuations over the years.

Some years there is a huge shortage in rentals, and other years landlords have issues finding someone to rent their properties.

For those that want to invest in real estate by purchasing a property and renting it out, they need to make sure that they can afford all of the expenses that typically crop up with home ownership and being a landlord even if their property is vacant.

A lot of real estate investors do find themselves getting into financial troubles because they buy houses that they only can afford when they are rented out.

  • Will We See A Bubble Burst Like We Did A Decade Ago?

Many people are assuming that this housing market won’t last very long, and we will see a similar bubble burst like we did about a decade ago.

Before I get into this, I first want to explain to you why we saw the previous bubble burst. The lending criteria was a lot looser. We saw a huge influx in the amount of buyers as so many people were able to buy a home even though they had poor credit and no down payment.

All of these buyers caused home prices to go up as well. Unfortunately, many people ended up with their houses going into foreclosure because they simply couldn’t afford them.

Things have changed drastically, and if we do see the bubble burst, it won’t be for the same reasons.

How To Decide Whether Or Not To Dive Into Real Estate Investment Right Now

As you can see, it certainly is a sellers market. We haven’t seen homes selling for rates this high since 2006. This can make it very difficult for individuals to buy a home if they don’t have a substantial down payment or have a high debt-to-income ratio.

Real estate investment is best when you can find a good deal on a home. Unfortunately, these homes are very difficult to find.

You may be better off just sitting back and waiting but still throwing as much money into savings as possible so that you are financially prepared to buy a property when the market shifts a bit.

I wouldn’t be surprised if foreclosures start to rise in the future for a couple of different reasons. Student loan forbearance programs won’t probably be extended after September 30, and those borrowers will have to start paying their student loans back once again.

Unemployment benefits will be expiring soon as well, so many individuals that lost their job will no longer be receiving the money that they need to pay their mortgage.

My Final Thoughts on is Now a Good Time to Invest in Real Estate?

I do think real estate investment 2021 is a good time to invest in real estate if you do it the right way and if you are buying for the long term.

If you can, wait until after September to buy a property. Also, you need to make sure that you have plenty of cash saved up as cash is king right now.

Finally, you need to constantly be on the lookout for a home to buy just in case an amazing deal pops up. Some areas are seeing a slight shift in the market.

While these shifts might be tiny right now, they also can be a good sign of things to come for real estate investors in the upcoming months.

I would love to hear from you now please.

If you have any thoughts on this subject or if you are buying an investment property right now, I’d love to hear from you in the comments section below.

Do you think the market will become more favorable for buyers anytime soon?

2 thoughts on “Is Now A Good Time To Invest In Real Estate? (2022)”

  1. I’ve been looking to become a landlord most of my adult life, but this is the first time I have had the stability (geographically) and cash to make it happen. Unfortunately, my readiness timed to right at the end of a pandemic where the market is hot and prices seem to be overinflated ( as your article mentions ). It looks like, it would take 2-3 years minimum in best case scenario for collected rent to pay off closing costs + any money I might invest to make it an appealing rental. Add to this the fear that in 2-3 years the property may be worth 10-20% less than I paid for it. In the long run, I would surely be OK, but do I really want to invest that much time and effort to get to the break even point ?

    I think your advice is spot on. Give it a few months and we might see the prices drop everywhere, but in the meantime, also constantly be on the lookout for that amazing deal.

    1. Hi Dave,

      Thank you very much for sharing your thoughts, it is really appreciated.

      I totally understand your reservations about investing right now. It’s not easy with the market so hot.

      In an ideal world we would buy properties when the market is down, but the market is not always down, so an experienced investor, will buy in all market cycles as long as the returns are good.

      If you did take the plunge and there was a crash, as long as you adopt a long term outlook, 5 – 10 years, you should be able to ride out any ups and downs in the market.

      Always buying in locations that have good rental demand, is critical, so if there is a dip you will always have customers to rent your properties.

      If you adopt the correct long term strategies and buy in the right locations, it can always be a good time to invest.

      All the best

      Harvey

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