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

What Do Business Consultants Do What Do Business Consultants Do
Business3 days ago

What Do Business Consultants Do?

Business consultants can be a huge help to your business – or a big expense that doesn’t give you the...

Careers You Can Start Without A 4-Year Degree and Benefits Of A Degree Careers You Can Start Without A 4-Year Degree and Benefits Of A Degree
Education3 days ago

Careers You Can Start Without A 4-Year Degree and Benefits Of A Degree

Among Baby Boomers and members of the Greatest Generation who got to get a college degree, career success and high...

3 Improvements To Add To Your Home 3 Improvements To Add To Your Home
Home Improvement1 week ago

3 Improvements To Add To Your Home

If you are getting a little bored of your home, you should start looking at things that you can do...

Rebuilding Your Life After A Personal Injury Incident Rebuilding Your Life After A Personal Injury Incident
Law2 weeks ago

Rebuilding Your Life After A Personal Injury Incident

After you have suffered a life-altering experience following a personal injury incident, you will begin the process of rebuilding your...

Best Ways to Improve Your Career Best Ways to Improve Your Career
Business3 weeks ago

Best Ways to Improve Your Career

Working on improving yourself is a continuous process. One that chisels you to perfection every time you do it. It...

New to Golfing? 4 Etiquette Tips You Need to Know New to Golfing? 4 Etiquette Tips You Need to Know
Entertainment1 month ago

New to Golfing? 4 Etiquette Tips You Need to Know

Golf is a sport that is governed by some very specific etiquette rules. If you are just taking up golf,...

How to Manage Scoliosis In Adult Period How to Manage Scoliosis In Adult Period
Health1 month ago

How to Manage Scoliosis In Adult Period

We always start thinking about our health, and the importance of it, once something goes wrong. When that inevitably happens,...

Simple Ways To Stay Warm This Winter Simple Ways To Stay Warm This Winter
Lifestyle1 month ago

Simple Ways To Stay Warm This Winter

You shouldn’t have to compromise on style for warmth, which is why we have put together this guide on how...

Staying On Schedule When Traveling With Family Staying On Schedule When Traveling With Family
Travel2 months ago

Staying On Schedule When Traveling With Family

There is a lot of planning that goes into traveling with your family, especially if you are trying to stick...

Do You Need A Lawyer When Filing For Divorce? Do You Need A Lawyer When Filing For Divorce?
Lifestyle2 months ago

Do You Need A Lawyer When Filing For Divorce?

Since divorce is a relatively common legal proceeding, some couples opt for a DIY approach. They decide to download the...

Unique First Home Gifts For Your Loved Ones Unique First Home Gifts For Your Loved Ones
Lifestyle2 months ago

Unique First Home Gifts For Your Loved Ones

If one of your loved ones is moving into their first home, we have the perfect gifts for you. Each...

Should Your Business Offer International Shipping? Should Your Business Offer International Shipping?
Business2 months ago

Should Your Business Offer International Shipping?

In today’s world, many businesses have the opportunity to reach a global audience and find new ways to grow. But,...

Why Isn't Your Company Website Seeing Traffic? Why Isn't Your Company Website Seeing Traffic?
Marketing3 months ago

Why Isn’t Your Company Website Seeing Traffic?

Are you hooked? Do you check your website’s Google Analytics frequently, only to be disappointed every time you see it? ...

Resources and Assistance For The Parents Of Children With Autism Resources and Assistance For The Parents Of Children With Autism
Education3 months ago

Resources and Assistance For The Parents Of Children With Autism

Raising a child with autism can be a challenge. For most neurotypical people (i.e., those who do not have autism),...

How to Improve Your Company Parking Lot Safety For Your Employees How to Improve Your Company Parking Lot Safety For Your Employees
General3 months ago

How to Improve Your Company Parking Lot Safety For Your Employees

When your workers park in the corporate lot, you want them to feel comfortable and protected. Your staff shouldn’t have...

Categories

Archives

Trending