Connect with us

Investments

Quick returns on housing investments could be over soon

As the prices for bonds fall and those of stock influx, many investors are now trying to find shelter in the housing market which is on a boom. However, according to 2 researchers at Atlanta Fed, this could be a losing intention. The prices for homes plunged by 33% in 2006 and since then, they have not yet returned to the peak achieved that year. The appeal for investing in single-family houses has only been boosted by the deep discounts present.

housing investmentsWhile talking to CNBC last year, Warren Buffet (an investment sage) said that if it were practical, he would procure a couple of hundred thousand single family homes. With the prices for single family homes increasing by 12% many investors have gone ahead and done as Warren had said. Even though the real estate market looks like a rich ground for investing in the long term, Jessica Dill and Ellyn Terry, the 2 Atlanta Fed researchers,  found out otherwise when they analyzed the numbers in the real estate market back to the year 1926. In their findings, a house hardly ever brings returns that are more than Standard & Poor’s 500 stock index. This is based on a homeownership period of an average of 13 years

The two researchers said that comparison shows that equity investment has more favorable returns than investing in the real estate, especially in the case where the house has been bought as an investment and not a home. Furthermore, the increased demand in the housing sector for single family house has only been heightened by the hedge funds and other investment pooling people have made so that they cash in on the current housing recovery. The smaller investors have also been snapping houses up and then renting them which has led to bidding war in some locations.

With the interest rates starting to go up, some other investors have let go of other types of asset with the treasury bonds which is considered a tradition safe haven among them. The ongoing increase in the interest rates will continue to put off the bond prices especially with the signals from the Federal Reserve of their intention to put to an end the 5-year policy of containing the borrowing costs .According to comparisons, even though the stock returns were more volatile, this was dampened over long periods of holding.

Even though investing in the real estate looks promising, there have been signs showing that the quick money may already have been made. 1st the sharp increase in the prices for homes has started to cool down due to the high mortgage rates. The demand for housing in the future also looks like it will dampen due to the strict lending standards. According to Ed Stansfield, a Capital Economics’ housing economist the increasing interest rates will also affect the market negatively as it will increase the monthly payments for the buyers, a situation which will make it hard for homebuyers to be qualified for loans in the future.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Posts

Business4 days ago

Can You Use Residential Property for Commercial Use

Having extra income, constantly flowing in can make all the difference in the current economy. Getting creative with how you...

What Do Business Consultants Do What Do Business Consultants Do
Business2 weeks ago

Running a Business? How to Minimize Supply Chain Issues

Supply chain issues have always been an issue for businesses but over the last few years, the effect and widespread...

Home Improvement3 weeks ago

How to Increase Your House Value Before Selling

Increasing home value is the first step to making your place more attractive for future buyers. Whether you are trying...

General3 weeks ago

Why Calorie Control Is Still The Best Way To Diet

There are a great deal of different options when it comes to dieting, every day there seems to be a...

The Benefits Of Trade Credit Insurance For Your Business The Benefits Of Trade Credit Insurance For Your Business
Business1 month ago

The Benefits Of Trade Credit Insurance For Your Business

Trade credit insurance provides cover for businesses who trade on a credit basis. If the people who owe money for...

5 Charming Restaurant Decor Ideas In 2022 5 Charming Restaurant Decor Ideas In 2022
Miscellaneous1 month ago

5 Charming Restaurant Decor Ideas In 2022

Making your restaurant memorable and stand out is a feat worthy of praise. The sheer pressure of wanting to succeed...

Bank Won't Fund Your Business? 4 Loan Alternatives To Get You Started Bank Won't Fund Your Business? 4 Loan Alternatives To Get You Started
Business2 months ago

Bank Won’t Fund Your Business? 4 Loan Alternatives To Get You Started

Businesses typically require some sort of collateral or proof of concept before funding their business venture. However, it is possible...

Planning A Stag Do Planning A Stag Do
Miscellaneous2 months ago

Planning A Stag Do

If you’re a Best Man then you’re in a unique position of responsibility, and before the day itself when you’ll...

Tips to Reduce Eczema Flare-Ups Tips to Reduce Eczema Flare-Ups
Health2 months ago

What Triggers Eczema | Tips to Reduce Eczema Flare-Ups

Eczema is a skin condition that can induce redness, itchiness, and skin inflammation. Its root cause is not fully understood,...

Women's Fashion Trends To Expect In 2022 Women's Fashion Trends To Expect In 2022
Lifestyle3 months ago

Women’s Fashion Trends To Expect In 2022

A new year means new fashion trends. We cannot wait for what is in store in 2022. It seems that...

Home Makeover Trends: Insights from The Pros Home Makeover Trends: Insights from The Pros
Home Improvement3 months ago

Home Makeover Trends: Insights from The Pros

Are you considering a home makeover but don’t know where to start? You’re in luck! In this article, we will...

Interior Design Trends 2022 Interior Design Trends 2022
Home Improvement3 months ago

Interior Design Trends 2022

We all spend time pining over other people’s interior’s on Pinterest or Instagram, but with these trends, it’s easy to...

Top Commonly Overlooked Car Maintenance and Repairs Top Commonly Overlooked Car Maintenance and Repairs
General3 months ago

Top Commonly Overlooked Car Maintenance and Repairs

Maintaining a car is a huge responsibility. There’s a lot that goes into that given how complicated a machine it...

What Is The Difference Between Strata and Property Manager What Is The Difference Between Strata and Property Manager
General4 months ago

What Is The Difference Between Strata and Property Manager

Real estate is a diverse market, and as such, it can be hard to determine the differences between various types...

Sleek Home Upgrades That Will Luxe Up Your Life Sleek Home Upgrades That Will Luxe Up Your Life
Home Improvement4 months ago

Sleek Home Upgrades That Will Luxe Up Your Life

Sometimes we need a vast endeavor to make our home look extravagant and cheek but very often you can implement...

Categories

Archives

Trending