In the midst of a shaky and altogether uncertain economic landscape, underscored by sky-high inflation and rising interest rates, investors have been faced with no shortage of harsh realizations and tough decisions in 2022. While more traditional investors remain either sidelined or doing their best to stomach the ongoing volatility in the stock market, others like real estate investors have benefitted from a more diversified approach, with some even flocking to accessible online platforms like Yieldstreet to invest in art and other unlikely alternatives.
With December just around the corner, let's take a quick look at a few things real estate investors may have learned in 2022:
Home prices are high, but may finally be cooling off. After the pandemic created a surge in demand while interest rates remained low, many buyers have been locked out of an incredibly competitive housing market, in which prices have risen up to 30% and bidding wars have been all but guaranteed. But as interest rates rise and demand appears to be cooling down significantly, 2023 could be the beginning of a return to affordability and a more level playing field between buyers and sellers. However, it's important to remember that no one has a crystal ball, and many real estate investors will likely be playing a waiting game before purchasing their next property so as not to catch the proverbial "falling knife" of declining valuations.
Being a landlord is more lucrative than ever. Much like home sellers, landlords have been the beneficiaries of increased demand for at least the past two years, caused in part by Americans reshuffling in the wake of the COVID-19 pandemic. In June, the median cost of monthly rent in the U.S. rose above $2,000 for the first time in history, making it more lucrative than ever for landlords filling vacancies between 2020 and 2022. And while there are indications of a cooling housing market, some believe that rent could stay elevated well into 2023 and beyond, meaning the party may not be over yet for landlords and other passive-income-minded real estate investors.
Alternative real estate investment opportunities have expanded. Real estate has long been considered a strong asset class and great alternative to traditional markets, but in recent years it's become even more dynamic and has given investors an impressive variety of opportunities and strategies to choose from. In addition to the usual buying and selling of properties, more passive strategies seem to be expanding in terms of both access and popularity. For example, using a crowdfunding platform like Yieldstreet, investors can buy into residential properties and realize the benefits of being a landlord without the need to deal directly with tenants. Additionally, platforms have made it easier than ever to earn passive returns in the commercial sector by investing in professionally managed Real Estate Investment Trusts (REITs).
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Original Source: Real Estate - What Investors Learned in 2022