Real Estate is Still a Great Investment

Investing is a cornerstone of building personal wealth. Real estate is a proven way to capitalize on your long-term investment even when inflation is high. Owning your property shields you from increases in housing costs and gives you an asset that typically gains value with time. If you've been looking for ways to diversify your investments, 2022 may be an excellent time to consider buying real estate. 

Some might think of investing in the stock market before investing in property, but investment property can have a higher return, especially in a strong market like Summit County. Currently, the stock market has a level of volatility that is not attractive to many investors. However, real estate is still going strong and has the advantage of being a tangible asset.  

Real estate weathers inflation storms better than the stock market. With a fixed-rate mortgage, your principal and interest mortgage payments remain the same and can always be refinanced to a lower rate in the future if the opportunity arises.

Although rates are higher than last year, they are still historically low. According to Freddie Mac data going back to 1971, the long-term average for 30-year mortgage rates is just under 8%. Today’s rate equals those of 2009. The lowest rate in the past 30 years was in December 2020 at 2.68% with the record-high average reaching a whopping 16.64% in 1981. In context, today’s 30-year rate of 5.81% still falls well below the historical average rate. To take advantage of the long-term savings that current low rates will bring, it may be wise to buy sooner than later. 

After years of appreciation and bidding wars to purchase in the past two years, the latest statistics indicate that the market is leveling to a semblance of ‘normalcy'. According to the National Association of Realtors, inventory rose nationwide during the past three months. With more homes available in the market, price gains will be rising at a slower pace. 

Inventory in the luxury market (properties sold for $1 million or greater) is also on the rise, but there are still more buyers than there are properties. Appreciation has continued on an upward trend for the past decade and because Summit County is nearing buildout, supply is unlikely to exceed demand.  

Bottom Line: If you are looking for a good return on investment, a well-chosen property could be a better option than growing your stock portfolio. Summit County has a track record of being one of the best long-term real estate investments in the United States. Colorado also has one of the lowest rental vacancy rates in the country making our region a great choice for a long-term rental property investment.  

Source: https://www.freddiemac.com/pmms/pmms30. 

Disclaimer: This real estate market forecast is based on educated opinion and should not be considered financial advice. Real estate prices are cyclical and dependent on the environment, economics and political factors that can and do impact real estate markets.