December 18th, 2018

Real Estate Investment Outlook For 2019

Real estate in 2018 launched with a boom in new construction. While that trend slowly leveled out, mostly due to higher interest rates, the housing inventory in many markets reached all-time lows. As we approach 2019, investing in real estate will see some new challenges and opportunities. Finding creative ways to expand your portfolio may be a good New Year’s resolution.

New Construction Real Estate 2019

With the launch of 2018, housing starts were at a 10-year high. The construction of more than 1.3 million housing units started in January, the U.S. Census Bureau reports. It’s not likely the real estate market will see another record-breaking start in 2019.

High interest rates and less demand from waffering buyers will keep developers from plunging forward with new projects in 2019. Developers often rely on loans and with a continuously climbing interest rates, many won’t want to gamble the return on investment.

The good news to the slight slowdown in new construction is that if another recession were to hit, there won’t be an oversupply of properties. Home values would take a dip, but the real estate market won’t take the devastating blow it did in 2008.

Real Estate Investing 2019

Mortgage rates have hit their highest point since 2011. The Federal Reserve increased interest rates three times in 2018, and may not be finished with another three weeks to go. It’s likely another increase will hit in 2019. While mortgage rates aren’t tied to the federal rate, they do tend to follow suit.

What does that mean for investors?

The story is two fold. Investors will need to be prepared for the higher interest rates or have other financial backing options. Certainly there are many more ways to invest in real estate than through a traditional mortgage, and 2019 will be the year to explore those options.

It also means home prices will be slow to rise in 2019. Investors will have more time to search for deals and operate with more negotiating power as homes stay on the market a little longer in the New Year.

The silver lining for real estate investors is that rental properties will be more in demand. House hunters who were questioning testing the market in the New Year, may be intimidated by the rising rates and stick with renting. For investors who depend on tenants to keep income flowing, 2019 looks promising.

Find A Seller In 2019

As buyers back away from the real estate market, sellers are more likely to turn to non-traditional methods to sell their home. Platforms like House Buyers of America, Opendoor and OfferPad are growing in popularity. Investors may have the opportunity to team up with larger companies to buy properties from sellers not willing to wait on a real estate agent.

Although sellers don’t usually see the payout they would from a traditional buyer, turning to companies and online platforms serves as a valuable resource for those who want to complete the deal quickly.

The New Year has many promising avenues for real estate investors, especially those who have access to financial backing beyond bank loans. Expand your portfolio by exploring commercial real estatewholesale real estate, or out-of-state investments.