The real estate market came to a halt in March 2020. That was when the COVID-19 pandemic was already causing havoc worldwide and had just started disrupting lives in the US. People were losing their jobs and becoming unable to afford daily necessities. Most importantly, lockdowns prevented them from stepping foot outside their houses. In such a situation, it was only natural that the housing market would suffer.
At present, however, the situation with the housing market is back to normal. This is because people are once again living in areas from where they can commute to work in person. In addition, the economy is much better than it was during the pandemic. All these factors are allowing people to invest in the real estate market. However, the risks involved in this market are still there.
The housing market risks have always been and will always be there. That, however, does not mean you cannot avoid them. If you play your cards right and exercise precautions, you can avoid those risks without any major issues.
So, before you get into the housing market, here are a few things you should know.
#1 Latest Market Trends
Market trends are constantly changing. No matter which industry you are in or what type of business you are setting up, you will always have to be on top of these changes in trends. Otherwise, the trends will get the better of you. In turn, you will lose customers and profits to your competitors, who probably did a better job in keeping up with said trends.
The housing market is no different from all the other markets or sectors. You must keep up with the latest real estate trends if you want to succeed in this market.
Here are a few housing market trends that you need to know of in 2022.
- House hunting is becoming more digital. When selling a house or property, you must try to include drone footage of the property, 3D tours and virtual staging. The COVID-19 pandemic played a huge role in setting this trend.
- People are heavily investing in real estate in the suburbs. Experts predict that this trend will continue till 2025.
- Demand for single-family homes is increasing. It is because of the growing demand for houses in the suburbs. The median list price for single-family homes in 2020 was $350,000 in September 2020, an 11% increase from September 2019.
- Home prices will continue to rise while mortgage rates drop.
- The rental property market is declining. However, within a couple of years, experts predict it will bounce back.
#2 Homeowners Insurance Cost
The average cost for homeowners insurance is $1,200 in the US. The insurance premiums you pay to any insurance company cover your home and other structures. It also bears additional expenses, including personal belongings and injuries on your property. Your home’s location, susceptibility to damage and how much it is insured for will affect the homeowners’ insurance cost.
Getting insurance is no longer a luxury. In the US, it has now become a necessity. Insurance will cover your home and possessions from theft or damage. You cannot risk not getting insurance, no matter how expensive it might get. However, you can always look for deals that suit your wallet as well as cover major theft and damage costs.
#3 Investment Purpose
You can invest in the housing market for two reasons.
Firstly, you can invest in properties only to sell them off later. Secondly, you can invest in a house and then live in it.
The latter requires more work and investment than the former. You can sell a property after its price increases. You do not need to invest any further unless you want to make more profit off of it. However, you have to invest more in a house you want to live in because you probably have a vision of how it should look. So, to turn that house into your dream home, you have to plan and invest accordingly.
Thus, you must keep the investment purpose in mind before you invest in the property. Your purpose will ultimately determine how much money you must invest and what you can expect in return.
#4 Property Valuation
There is no better way to understand the true value of a house or property than by looking at its property valuation.
The property valuation determines the worth of a property. It considers factors like size, location, age of the house or property, layout and other specialized features. While looking into the valuation, it is always wise to compare the property’s value with other properties with similar features. Doing so lets you get a good deal, ensuring you do not invest in the wrong property.
#5 Legal Aspects and Documentation
The last thing you want while investing in real estate is to get into legal trouble of any sort. Once you get into legal trouble, it becomes extremely difficult to wiggle out of it.
Most legal troubles arise in the real estate business because buyers or sellers fail to provide necessary documents. So, before getting into the housing market, here are a few documents you need to keep account of.
- Buyer-agent agreement
- Purchase agreement
- Addenda, amendments, or riders
- Seller disclosures
- Home inspection report
- Closing disclosure
- Title insurance policy
- Property deed
All these documents are necessary to avoid legal problems when buying a house or property. If your seller is not providing you with any of these documents, you should consider backing off the deal. Get in touch with a lawyer if you are struggling to get your hands on these documents or need help understanding them.
Businesses are bouncing back from the situation during the COVID-19 pandemic. The housing market will do so too. However, given the size and diversity of this market, it is taking its time to do so. Despite that, the real estate market is still doing better than many other sectors. So, as long as you keep the points we have talked about in mind, you will not struggle in any way while entering the housing market.
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