To figure out the answer to the question “Is real estate a good investment in 2020?”, we need to consider the US housing market trends expected for next year. Here are the most important factors which both experienced and beginner real estate investors should keep in mind in 2020:
1. Real Estate Prices Will Continue Going Up
Speculations that the US real estate market might enter into another recession in 2020 are just that – pure speculations. There are no major signs to show that this will be the case. On the contrary, the vast majority of real estate experts expect the values of homes for sale in the US housing market to continue increasing, albeit at a lower rate. If you are starting to think whether investing in a rental property for sale is worth it in 2020, rest assured that it is. The slowdown in the rate of real estate appreciation is actually a good thing as it will prevent another housing bubble from happening any time in the near future. Moreover, only a small decrease in the appreciation rate is expected, while real estate prices will actually continue rising faster than the inflation rate.
2. Lack of Affordability Is Not a Defining Factor
Many real estate experts including real estate investors are increasingly worried about the growing lack of affordability in the US housing market. However, this is not a constraining issue in the overall market but more of an isolated problem in certain markets. It is absolutely true that buying an investment property in locations such as the San Francisco real estate market, the Los Angeles real estate market, and the New York real estate market is challenging, especially for those just getting into real estate, but other places like the Dallas real estate market and the Phoenix real estate market offer more affordable real estate listings. With the right tools including Mashvisor’s investment property calculator and Property Finder, new real estate investors can easily find income properties at reasonable prices with good cap rate and good cash on cash return. All in all, buying cheap properties is still a viable possibility in many locations, which is one of the reasons that make real estate a good investment strategy in 2020.
3. Interest Rates Are Expected to Remain Low
Experts predict that interest rates will continue being relatively low at around 4% in 2020, which means that those who wonder how to invest in real estate due to insufficient cash capital can resort to a mortgage. The fact that you don’t have to use only cash makes buying a rental property one of the best investment strategies out there – in 2020 and in general. Buying an investment property all in cash is hard even for experienced real estate investors, not to mention beginners. However, you should not worry about how to make money investing in real estate if you don’t have enough cash as financing a property with a mortgage will be an affordable option. The expected low interest rates are one more reason why now is a good time to become a real estate investor.
4. The US Housing Market Is Transforming
The US real estate market has been a seller’s market for a few years now. While a sudden change to a buyer’s market is not expected to take place in 2020, the slow transition in this direction which started in 2019 is forecast to continue. The stabilizing inventory, the slowdown in appreciation, and the low mortgage interest rates are all pointing to this real estate trend. This will be a very important positive factor, especially for beginner real estate investors, who will not need to enter into bidding wars and compete with homebuyers and more experienced property investors. Meanwhile, if you are interested in locations that are expected to be definite buyer’s markets in 2020, have a look at the Nashville real estate market and the Atlanta real estate market.