How Do You Respond To Rising Real Estate Prices?
Buying a home is once again becoming less affordable, but so is renting. Even with rising real estate prices, buying your home is still a less expensive option in the medium to long term. So, how can first-time buyers make a move to home ownership when it’s such an extreme reach to do so?
As it turns out, surging housing prices aren’t a problem for all regions of the country, some areas are affordable, others not so much. The price of houses and condominiums connect to other factors. The desirability of the region and the demands of the job market; residential real estate affordability relates directly to the quality of life and economic strength of your area.
Options That Make Home Buying More Affordable
Your choices in the face of high real estate prices are only limited by your imagination and determination. Granted, some of those choices sound a little like strong medicine. But, as prices go up, earning extra capital will require that you commit to investing sweat equity.
Here are some things you can do in response to high housing prices:
Move to a more affordable region – Harsh, but if you live in one of the most expensive parts of the nation, there are homes of equal size and quality that are less expensive elsewhere. If you’re retiring or can work remotely, you may find that other regions have much to offer.
Begin the process early – If you decide to buy your first home in an expensive community, you have to take longer and work harder to gather the necessary resources.
Get a second job – If you can save the income from a second job it could add up to a down payment, or at least enough to cover your closing costs. Five to eight hundred hours of work extra in a year adds up to a chunk of change, even at minimum wage. Also, keeping busy will help you avoid spending extra cash on entertainment, making your nest egg even bigger.
Explore Government loan guarantees – If you aren’t already checking out programs that offer government-backed financing. FHA and the Veterans Administration are two such examples. One of these programs might get you a smaller down payment and a lower interest rate than you could qualify for otherwise.
Lower your expectations – Well that just sucks! Or does it? Perhaps a more modest home-buying option could be a happier one. A smaller house or one further out from town might come with peace of mind included.
Tips For Would-Be Investors
Invest in more affordable regions – Like moving to cheaper regions, investing in residential and commercial investments can provide bargains. Smart investors can find less expensive options with which to expand a property portfolio. The returns will be proportionally smaller and growth slower, but over time, you can attain substantial equity.
Join a real estate syndicate – When investors of modest means want to tackle ambitious projects they form syndicates, legal entities pool assets. Ask your real estate broker or business-banking manager for local opportunities.
Buy shares in REITs instead – Larger syndicates can apply for special tax treatment, as real estate investment trusts. Many of the largest REITs are listed on the stock market and pay substantial quarterly dividends. Publicly traded REITs are the most hands-off real estate investment, available from your stockbroker.
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