Table of contents
Table of contents

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Table of contents
Table of contents

Is now a good time to buy real estate?

This is an important question that deserves careful consideration in order to be a successful real estate investor.

Let's start with first principles -- what do we know to be true about real estate?

  • Real estate is capital intensive
  • Capital intensive industries require financing
  • Increases in interest rates make it more expensive to finance real estate
  • When real estate becomes more expensive, demand goes down
  • When demand goes down, prices appreciate slower or decline

The Lock In Effect

As interest rates have rapidly risen from historic lows, home owners that would otherwise consider selling are having a difficult time justifying trading in a home financed at an interest rate in the high 2s or 3s for a home in the 6s or 7s. As a result, if interest rates remain elevated, we believe there will be less selling. Less selling means less inventory (supply). This will support elevated home prices, or at least reduce the chances that we see a broad decline in home prices.

Real Estate Investing Sayings

There are a few sayings that drive home the answer to this question:

  • Time in the market is better than timing the market.
  • Don't wait to buy real estate. Buy real estate and then wait.
  • Marry the deal, date the rate.
  • Buy the best and wholesale the rest.