Should You Buy REAL ESTATE In 2021 | Housing Market Explained
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Guys, there are a ton of advantages of investing in real estate. If you are able to find a decent size property in a good neighborhood, your investment in the property can sometimes 5x or even 8x over the next 30 years. This is similar to investing in the stock market, except it can be much safer depending on where you buy the property and at what price. If you go to your browser and search for the historical growth in the average price of houses you will find that home prices in the United States have grown by roughly 4% per year over the past 30 years.
Apart from the growth in home prices, another way you can benefit from buying real estate is in the form of taxes. If you were to put the interest payments on your mortgage towards deductions on your tax return you can easily bring your taxable income down by a few thousand dollars. This does not stop here though. One major way real estate investors make money with their investments is by buying and renting their properties for generating a monthly cash flow.
real estate investments are considered to be generally a safer form of investment. Investing in real estate also means that you are buying the land that the home is built on in most cases. Although the value of a home depreciates over time as wear and tear takes a toll on the home if you don’t keep up on investments as the windows start to fall apart and the roof starts leaking and suddenly the floral wallpaper that you once thought of as being the best thing on the market, suddenly isn’t desired by new home buyers currently looking for a place to call their own. But the land that your home is built on never loses value. Even if you were to completely tear down the house that you were once living in you could still sell that land that it was built on for as much as 50% of the price of the home.
Investing in real estate is also a good hedge against inflation guys. Like I said earlier the average home prices in the United States have grown by about 3.9% over the past 30 years until early 2020. Inflation on the other hand has grown by roughly 2 and a half percent over the same amount of time. To help you understand better, if you had a 100 dollars in the beginning of the year 1990, your 100 dollars would be worth 2.5% less each year from 1990 until end of 2020. Inflation basically erodes the buying value your money has each year. This is basically why prices keep jumping each year, and salaries have to go up each year, and cost of living also goes up each year.
Current Real Estate market seems to me like a bubble just waiting to burst. I feel like home prices are just waiting for a catalyst to show up that will just start dropping their average prices to significant new lows as buyers start shying away from buying homes again. As to what you should do in this market, my recommendation is that you should wait and watch the housing market for a while. As the economy comes back to some sort of normalcy and mortgage forbearance, which has been in existence since mid 2020 and will be in existence until the end of summer, goes away and finally mortgages that cannot keep up with payments have to be foreclosed early next year, my feeling is that home prices will come down and start normalizing and will present a better opportunity for buying for millennials like us. All of this combined with interest rates that may start going up early next year may create more supply in the market than there is demand for and might bring housing prices down significantly.
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DISCLAIMER: I’m just a random guy on YouTube so do your own research! Sharil Patrale is not a licensed financial advisor. This video, the topics discussed, and ideas presented are Sharil’s opinions and presented for entertainment purposes only. The information presented should not be construed as financial or legal advice. Always do your own due diligence.