Is it a Good Time to Invest in Real Estate? Will Real Estate Prices Go Down?
Should I invest in property in 2023? Will real estate prices go down? These are some of the questions that I'm getting a lot of these days. These are fair questions. People want to know if it is a good time to invest in real estate, and whether their investment is going to appreciate or at the very least retain its value. The current uncertainty in the market, rising interest rates, and voices in the media trying their best to spell doom and gloom for the property market do not help. So is this the right time to invest? I think there are different questions we need to ask: What type of investments should you be looking at?
So when we hear all the alarmism in the media about falling property prices, this is largely to do with commercial property prices. It is true that there is a lot of office space currently lying vacant but this isn’t the kind of investment I'm speaking about here. I always advise investors to opt for brand-new single-family homes in good neighborhoods. There is always going to be a market for this type of real estate because there are always going to be young families with kids looking to rent.
And as to will real estate prices go down, in a lot of places in the residential property market, prices are actually going up and not down. Demand is actually rising, not plummeting. The residential property markets tend to behave very differently from commercial real estate markets. The residential space is still affordable and there is still a lot of scope for good investments. So, when someone asks me, should I invest in property in 2023, as long as you choose the right markets to invest in, right now is very much a good time to invest.
How high is too high?
Another concern that investors have right now is that interest rates on loans have gone up in recent times so is it a good time to invest in real estate? While they were hovering around the 2% mark not so long ago, they are now in the region of 6.5%. We must remember that this‘high-interest rate’ is a relative term. It merely seems high in comparison with how low the rates were during the COVID-19 pandemic.
When people express alarm at the current rates, I actually feel like laughing. Why, you ask? This is because I have invested while rates were far, far higher and haven’t regretted it. There were times when interest rates were touching 14% and we continued to buy. We've bought thousands of properties, regardless of interest rates, and without thinking will real estate prices go down?
What is the most important component of your real estate investment?
So clearly any time is a good time to invest and interest rates don't matter all that much. So what does really matter? What really matters is the kind of loan you take – so long as you use the 30-year fixed-rate loan, you are giving your investment the best possible chance to grow.
When you buy a home using this loan, you don't have to be worried about whether the rates are climbing, falling or remaining the same. Your repayment amount remains the same regardless. If rates fall, you have the option of refinancing. If they remain the same, there is nothing for you to do. If rates go up you are secure in the fact that your rates will remain the same! Plus, inflation means that your mortgage amount becomes easier to repay. To the question“Should I invest in property in 2023?” my answer is a resounding“Yes!”
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ICG uses single-family home investments, bought in advantageous locations and the best U.S. markets. We enable you to enjoy the clout that comes from purchasing a multitude of houses, even if you only buy one.
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