Should I invest in real estate or should I hold my horses?
As an investor, these are the questions ringing through your mind, and it’s easy to see why. 2020 has been a year like no other in recent memory. The COVID-19 pandemic has wreaked havoc on the economy, sending thousands of businesses to the cleaners and rendering millions of people out of employment.
So, is it savvy to invest at a time when there’s so much uncertainty in the market? It’s important to do in-depth market research before making your moves. We’re here to help you with that.
In this article, we’re sharing insights that will help you decide whether investing in real estate right now is a good idea.
The State of Real Estate Market in 2020
There’s usually a strong correlation between the economy and the real estate market. When the economy is expanding, the real estate market does well and property values climb. But when the economy is on a slowdown or even in a recession, property values fall. The Great Recession (2008) is a perfect example of how a failing economy can have a devastating effect on the real estate market.
The effect of the coronavirus on the economy is well-documented. But has the effect trickled down to the real estate market? There was a shock on the market soon after the coronavirus was declared a pandemic, largely due to the fact the people stayed home.
However, a decrease in potential buyers doesn’t necessarily result in a reduction of property prices. This seems to be what is happening. Prices are holding up in most parts of the country.
That being said, the economy was already on a slowdown, recording a 2.3 percent decline in 2019. As a result, property prices were also on a gradual decline.
Before making an investment decision, it’s important to research the local market where you want to buy or build a property. If you’re eyeing Kansas, for instance, these facts will enlighten you.
Rule 1 of Investing: Buy Low
If you’re a seasoned investor, you’re certainly familiar with this rule. In real estate, just as in the stock market, you want to buy your preferred assets when their prices are at their lowest.
Sure, it can be hard to identify when prices have bottomed, but you stand a good chance of making a successful investment when you buy as low as possible.
The COVID-19 crisis might not have caused prices to bottom, but they’re lower than they’ve been for a long time. You could hold on and see if they will fall even further in 2021, but there’s every indication that now would be a good time to buy.
What’s more, you’re more likely to find properties in distress right now, considering the financial implications of the pandemic. Distress properties typically sell at lower than market value prices, so you could land a pretty good deal.
Investing in Real Estate in 2020: Proceed with Caution
Economic uncertainty is an investor’s worst nightmare. Yet, 2020 is just that.
Should you invest? Should you wait? With the information fleshed out above, you’re undoubtedly in a better position to make an informed decision.
Keep reading our blog for more tips and insights.
And you may purchase a unit at Forett at Bukit Timah.