specialties in real estate :: Article CreatorThe Truth About Real Estate Prices
Real estate has traditionally been considered a safe investment but recessions and other disasters tend to test that theory. Though the general trend of home prices has been upward, there have been bumps along the way. The length of time you own a home can determine how safe of an investment it is; the longer the better, all things considered.
Key Takeaways
Home values tend to rise over time, but recessions and other disasters can lead to lower prices. Following slumps, home values can increase in some areas of the country because of strong demand and low supply, while other areas struggle to rebound. Potential homebuyers shouldn't focus on national trends, as prices vary between states and even neighboring cities. Low mortgage rates have an indirect effect on home prices, as consumers are willing to take on more debt when credit is cheap. Historical Prices Before 2007, historical housing price data seemed to indicate that real estate prices could continue to rise indefinitely. In fact, with few exceptions, the average sale price of homes sold in the U.S. Climbed steadily each year from 1963 to 2007—when the housing bubble burst and the financial crisis of 2008 ensued. Since then, though the trend has been upward, it has been more fragmented. Rebound After the Financial Crisis By 2013, the average sales price of homes sold in the U.S. Had rebounded to pre-crisis levels. For the next several years, the uptrend looked promising, until 2018 when prices flattened, and then began to fall slightly in 2019. Prices saw a dip in 2020 but housing prices have been climbing drastically since then and leveling off around 2022 with dips and climbs through 2024. Of course, real estate prices depend heavily on the market (location, location, location), and national trends can tell only part of the picture. A boom in California can mask a bust in Detroit. Even within the same city, numbers can vary widely. Areas that experience new growth or gentrification can show significant price appreciation, while areas across town can be in decline. The chart below shows how the south, west, northwest, and midwest regions experience different trends in real estate prices. When looking at the national and regional statistics, be sure to account for the reality of the market in your local area. Rising prices at the national level may not help you if your city, state, or neighborhood is in decline. Current Home Prices Home prices since 2020 have increased at unprecedented rates as the economy reemerged from the downturn of 2020. Record low mortgage rates and a shortage of homes for sale were the primary drivers of this phenomenon. At the same time, temporary shortages in lumber and skilled construction labor added to the upward movement of prices. Home prices started leveling off in 2022 when the Fed started increasing interest rates to fight the high inflation. The Fed's target rate went from between 0.25% and 0.50% in March 2022 to between 5.25% and 5.50% as of Jan. 2024, making borrowing more costly for would-be homebuyers, thereby reducing the demand. In Jan. 2022, the average price of a home in the U.S. Was $501,200 and in Nov. 2023 (latest data) it was $488,900. Home Trends Of course, it's important to consider that factors other than supply and demand can affect real estate prices. For example, even before the numbers began to go the wrong way in 2008, the National Association of Home Builders reported that the average home size in America was 983 square feet in 1950, 1,500 square feet in 1970, and peaked at 2,740 in 2015. This trend continued in the first half of the 2000s, after which it began to decline somewhat. Still, with homes getting bigger and inflation adding to the cost of building materials, it is only logical that home prices would rise. Other trends can drive prices up, too, such as buyer preferences for more expensive flooring, appliances, fixtures, and the like. National trends may not give you the whole picture, as real estate values and prices vary between states and neighboring cities. Homes as Investments Because home prices tend to rise over time, buying a home has traditionally been viewed as a safe investment. Still, an important point to consider when looking at a home as an investment is that it won't ever pay off unless you sell it. From a practical standpoint, even if your primary residence doubles in value, it probably just means that your real estate taxes have gone up. All of the gains you experience are on paper until you sell the property. Of course, for many homeowners, that's alright. A home that doubles in value is a nice asset to pass on to the kids and grandchildren. Downsizing If you decide to sell and buy another home in the same area, remember that the prices of those other homes have probably risen, too. To truly book a gain from your sale, you will likely need to move to a smaller home in the same area, or move out of the area and find a less expensive place to live. Of course, downsizing is an attractive option for many retirees and those who no longer have children living at home. Aside from the potential financial gains, a smaller home is easier to take care of (at least in theory), and it can address future mobility issues. Home Equity Loans While it is possible to tap the equity in your home by taking out a loan against it, using your house as an automated teller machine (ATM) is not always a good strategy. Not only does the interest you pay eat into your profits, but the loan payment takes away from your financial stability. If real estate prices decline, you may find yourself in the unenviable position of owing more on the loan than the house is worth. Mortgage Rates Mortgage rates generally rise during periods of economic growth. When this happens, the job market is healthy and people's wages rise, too. Conversely, mortgage rates tend to fall during economic slowdowns as the Federal Reserve tries to make it easier to spend and borrow. The average 30-year fixed-rate mortgage rate had been below 5% since 2010 (keep in mind that even tiny changes in rates can have a huge impact on the overall cost of your home) until the Fed started aggressively increasing rates in 2022 to fight inflation. This chart from the Federal Reserve Bank of St. Louis shows historical prices for 30-year fixed-rate mortgages, starting in 1971. The rate in Jan. 2022 was approximately 3.22% and in Jan. 2024 it was 6.62%. So how does this play out for real estate prices? Lower mortgage rates don't necessarily have a direct relationship to home prices, even though we'd like to think they do. But they may have an indirect effect on them. When rates are low, consumers are more willing and can afford to take on more debt. That's because the cost of credit (i.E., interest) is cheap. Rising interest rates, though, tend to lead to weaker demand from buyers. Is Buying a Home a Good Investment? The idea that a home is a good investment stems from the fact that real estate prices tend to rise, at least historically speaking. Since there's no way to predict the future real estate market, it's important to avoid getting in over your head. A home is a good investment only if you can afford it. Of course, you are unlikely to see any profits that you can spend if you plan to live in the same house all of your life. But if you buy with an exit strategy in mind, there is a much better chance of realizing a cash profit. First, consider your motivation for buying a home. If you want to live in it, then you probably don't need to think about your home in terms of profits and losses. If you're hoping to make money, then you need to enter the transaction with an exit strategy. This also means you should have a selling price in the back of your mind, all while keeping the purchase price of the property at the forefront. When the market reaches your price point, you sell the property just as you would a stock that has appreciated. This may not be a practical approach for your primary residence, depending on your lifestyle, but it is exactly what many real estate investors do when they purchase properties—renovate and sell them. Just remember that prices don't always move up. What Is the Price of a Home in the U.S.? As of Nov. 2023 (latest information), the average price of a home in the U.S. Is $488,900. Prices have been increasing since 2011 but often have been choppy given the economic environment. What Is the Mortgage Rate? As of Jan. 2024, the average 30-year fixed mortgage rate is 6.62%. Rates have climbed steadily since 2022 as the Fed made moves to fight inflation. This has made buying a home more costly. Is It Good to Buy a House Now or Wait for a Recession? Buying a house during a recession can be a very risky move. During a recession, a nation falls on economic hard times. If you lose your job, it may be difficult to get approved for a loan. Even if you do end up buying a house during a recession, it could still be risky. You may lose your job and no longer be able to make your mortgage payments, resulting in a foreclosure on your home. During a recession, demand for homes decreases; if you need to sell your home, it may be a tough time to do so or you may end up selling it for a loss. The neighborhood you live in can also be adversely affected by a recession, depressing property prices there. The Bottom Line With history as a guide, most would-be homeowners would do well to buy a place they actually hope to inhabit, pay off the mortgage quickly, live there until retirement, then downsize and move to a less expensive home. It's not a sure bet, but this strategy does increase the likelihood of making a profit.
Real Estate Jobs In UAE Keep Having The Highest Demand - Mortgage Advisors Too: LinkedIn Poll
Dubai: It isn't tech jobs and vacancies in the UAE that are having the highest listings on LinkedIn– instead the demand is for real estate professionals who tick all the boxes when it comes to skillsets.
Which should not come as a surprise as the Dubai and UAE property markets continue its 3-year golden run, which has seen transaction levels and individual property sales hit new highs. Or come close to them.
This has in turn created an unprecedented demand for real estate professionals, whether that's for marketing and sales roles at estate agents, senior management roles at developers, and, of course, for professionals who've got a grasp of property management services. Every week, or so it seems, new jobs continue to be created in the local property market, and there are new players coming to the UAE to try their hand at selling property from just about every continent.
The demand for expertise in real estate extends to mortgage advisors as well, which is the third most prominent role in the LinkedIn findings.
Salaries and all manner of incentives/commissions too have risen in the UAE real estate space during this period - which then extends its own pull in getting more professionals into the industry.
And which profession is in the second spot? 'Partnership specialists', who can help with business development and digital marketing.
Wanted – tax specialists
Of course, the other in-demand category is for tax experts, whether for advisory or corporate tax/VAT consultancy.
"In 2024, we are seeing UAE professionals moving to the driver's seat when it comes to their careers," said Ali Matar, the EMEA Growth Markets Leader and Head of LinkedIn for the region.
"This will give rise to a more competitive job market, so standing out from other candidates will be more important than ever.
"We do see an appetite amongst UAE - and KSA - professionals to upskill and invest in building personal profiles. Highlighting how one's skills are relevant to the job they want and staying on top of industry trends will also improve chances of finding the right opportunity."
Trending jobs in Saudi Arabia
The job profile and demand dynamics paint a much different picture when it comes to jobs in Saudi Arabia.
It's anyone answering the 'patient care technician' profile who has the highest demand. Again, not much of a surprise given the investments and expansions happening in the Saudi healthcare sector, and each of which requires fresh recruitment needs.
According to LinkedIn, 79 per cent of Saudi professionals have the 'confidence about interviewing for a new role', and 78 per cent believe they have what it takes searching for a new job. "This confidence stems from a significant number of them (77 per cent) believing that their job prospects in 2024 are better than last year," the networking platform says.
Work-life balance a priority for Saudi women
More Saudi women are 'pursuing career moves' this year (61 per cent) than men (57 per cent), citing a need for better pay (39 per cent). This is a trend showing up in the UAE hiring market too.
"More women in Saudi are seeking better work-life balance (34 per cent) as opposed to men (30 per cent)," LinkedIn states. "KSA women (57 per cent) also state satisfaction in their current job as the main reason for not wanting to look for a new one, while men said that their main reason is good salary and benefits (52 per cent)."
Oxford Finance's Healthcare Real Estate Group Closes Over $430 Million Of Capital Commitments In 2023
ALEXANDRIA, Va., January 16, 2024--(BUSINESS WIRE)--Oxford Finance LLC ("Oxford"), a leading specialty finance firm that provides senior debt to life sciences and healthcare companies worldwide, is pleased to announce that its Healthcare Real Estate and ABL Group continued its stable growth in 2023, with Oxford providing over $430 million of capital commitments. The group closed a total of 11 transactions ranging in size from $2.0 million to $89.0 million.
While securing capital posed a challenge for numerous healthcare providers throughout the year, Oxford's consistency in the marketplace, extensive industry expertise and customizable lending solutions enabled it to form multiple new lending relationships and expand on existing relationships within its current portfolio. Heading into 2024, Oxford remains well-positioned to continue its current expansion trend into the new year and beyond.
Select transactions completed in 2023 include:
Texas Revolving Line of Credit: Oxford provided a $14.25 million revolving line of credit to finance working capital needs for 29 skilled nursing facilities for an expanding Texas-based operator. The credit facility also includes an accordion feature that would allow the borrower to increase the line limit to $27.25 million.
Pennsylvania Recapitalization: Oxford provided a $34.1 million term loan, a $2.5 million mezzanine loan, and a $2.0 million revolving line of credit to recapitalize two skilled nursing facilities and one personal care home containing 168 beds for an experienced Pennsylvania-based operator.
California Acquisitions: Oxford provided a $56.5 million term loan and $6.0 million revolving line of credit to support the acquisition of two behavioral health facilities consisting of 335 licensed beds in southern California for an experienced California-based operator.
In a separate transaction, Oxford provided the same operator with a $16.6 million term loan and $3.0 million revolving line of credit to finance the acquisition of two skilled nursing facilities in northern California consisting of 227 licensed beds.
Story continues
Illinois Acquisition: Oxford provided a $53.9 million term loan and a $5.0 million revolving line of credit to finance the acquisition of 11 skilled nursing facilities and one independent living facility consisting of 1,080 beds for a growing Illinois-based operator.
West Virginia Acquisition: Oxford provided a $50.0 million term loan and a $10.0 million revolving line of credit to finance the acquisition of two skilled nursing facilities comprised of 165 licensed beds for an expanding regional operator.
Alabama Acquisition and Refinance: In its largest deal of the year, Oxford provided a $75.0 million term loan, a $4.0 million CapEx line, and a $10.0 million revolving line of credit to finance the acquisition of five skilled nursing facilities and refinance existing debt at five additional skilled nursing facilities comprised of 1,113 licensed beds for an experienced Alabama operator.
Florida Acquisition: Oxford provided a $67.4 million term loan and a $15.0 million revolving line of credit to finance the acquisition of three skilled nursing facilities and three assisted living facilities comprised of 733 licensed beds for an established multi-region owner in partnership with a local operator.
About Oxford Finance LLC
Oxford Finance LLC is a specialty finance firm providing senior secured loans to public and private life sciences and healthcare services companies worldwide. For over 20 years, Oxford has delivered flexible financing solutions to over 700 companies, allowing borrowers to maximize their equity by leveraging their assets. Since 2002, Oxford has originated more than $11 billion in loans. Oxford is headquartered in Alexandria, Virginia, with additional offices serving the greater San Diego, San Francisco, Boston and New York City metropolitan areas. For more information, visit https://oxfordfinance.Com.
View source version on businesswire.Com: https://www.Businesswire.Com/news/home/20240116961351/en/
Contacts
Amanda SternOxford Finance LLC703-519-4900 Telmedia@oxfordfinance.Com
Comments
Post a Comment