​Is Now the Right Time to Invest in Property?

Lucy Wyndham  |

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Economic experts assert that property is the surest asset to invest in, since house prices almost always appreciate and you are able to invest using the banks money. However, ever since the global recession of 2008, house hunters have been wary. Could the latter half of 2019 see an economic collapse that makes property an unwise investment right now? In order to predict this, it is necessary to look at the state of subprime mortgages, financing rates, and equity. In order to receive the best return on investment, study localized property markets.

Subprime Mortgages Are at a Low

If you are worried about a 2008 style recession that causes rapid decline in property prices, well, don’t be. The major trigger for a collapse in the market was an oversupply of subprime mortgages, which made up around 20% of all mortgages in 2015. Today, that rate has dropped substantially to just 5%. This makes the market much more stable and unlikely to experience a financial crisis on the scale of 2008. With a few luxury home additions, your property’s value is guaranteed to go up.

Added to this fact is that consumer credit ratings are at their highest point since 2001, so lenders can be confident that they are handing out money to those who can afford to repay it. It is this stability that makes a financial crisis in the near future unlikely, so you should invest in property now and do so with confidence.

Financing Rates are High, But So is Return on Investment

Another concern that property investors have regards financing rates. Mortgage rates currently stand between 3.8% and 4.2%, which can be off putting to someone looking to take out a mortgage. However, if you track the trends throughout the last few decades, you will see that property is still showing positive returns in times of high financing rates.

Instead of just looking at the interest rates, take other factors into account. If the economy is getting stronger, employment rates are rising, and business is booming, then there is a strong chance property prices will be on the rise. As of July 2019, all of these things seem to be the case, making it the perfect time to invest in a new home.

Where is Equity Highest?

While global and American trends are important, looking more locally can give you an idea of where return on investment is highest. Although overall return on investments may be in the positive, some areas could have depreciating house prices. Put your money in the most lucrative locations, which is New York and the west coast including California, Oregon, and Washington. Avoid the midwest where debt levels are at their highest.

Although you may still be recovering from the shock of 2008, now is as good a time as any to invest in property. Price appreciation looks set to continue among a backdrop of tighter regulations and a steadily growing economy. Just be sure to put your money in the locations with the greatest return on investment.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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