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Although many anxious Americans are sweating it out until mortgage rates slide to enter the housing market, “Shark Tank” star Barbara Corcoran believes you might not benefit as much from lower financing costs as you’d expect.
The average 30-year mortgage rate is currently sitting at around the 7% mark and keeping plenty of buyers at bay, but The Mortgage Bankers Association forecasted rates will end at 6.1% by the end of 2024 and Fannie Mae is anticipating them to dip to 5.9% during the fourth quarter.
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“If rates go down just another percentage point — that’s what I’m hoping for by year-end — prices are going to go through the roof because everyone will come out and buy,” Corcoran explained in a recent interview on Fox Business’ “Cavuto: Coast to Coast.”
Here are a few things to keep in mind if you want to buy a home this year — and a few smart ways to invest in real estate even if you aren’t ready to wade into the market just yet.
Lower mortgage rates could lead to higher prices
Corcoran says, “There’s a magic number” that could entice homebuyers to come out of the woodwork, stir up demand, and cause home price growth to escalate even further.
“If you wait for interest rates to come down by another point, I don’t think you’ll gain — I think you’ll wind up paying more,” Corcoran warns. “I wouldn’t be surprised if real estate went up by another 8% or 10% if interest rates come down a full point.”
According to the latest data from Redfin, the median home sale price at the end of March was $374,500, a 4.6% increase from this time last year.
But there are other options for those hoping to invest in real estate who aren’t ready to enter the buyer’s market quite yet.
For example, you can tap into the market by investing in shares of vacation homes or rental properties through Arrived.
Backed by world-class investors including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.
To get started, browse through their selection of vetted properties, picked for their potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100, potentially earning quarterly dividends.
Alternatively, you can explore the commercial sector by investing in shares of high-quality properties leased by major brands like Kroger and Walmart through private equity firm First National Realty Partners (FNRP).
FNRP specializes in necessity-based commercial real estate, which tends to perform well even during periods of economic volatility. As a private equity firm, FNRP acts as the deal leader, providing expertise, doing the legwork and streamlining the process, while investors passively collect distribution income.
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Another way to get your foot into the market is through a real estate investment trust (REIT), which is another way to gain exposure to the market without the need for buy a property, take out a mortgage or deal with landlord obligations.
Unlike buying a house — where transactions can take weeks and even months to close — you can buy or sell shares in a REIT anytime you want throughout the trading day. That makes them one of the most liquid real estate investment options available.
Both accredited and non-accredited investors can check out RealtyMogul, which offers an Income REIT and a Growth REIT that have paid a combined $44.5 million in distributions.
RealtyMogul provides accredited investors access to a curated selection of real estate opportunities, allowing you to evaluate performance history before deciding where you want to put your money. The entire process, from screening to performance monitoring, can be done online through RealtyMogul’s user-friendly platform, complete with a personalized dashboard for easy portfolio management.
How to prepare
The Fed is expected to introduce cuts to the federal funds rate in the near future, which would impact home loan rates as well.
Corcoran was echoing the same remarks she made in December, when she encouraged Americans to buy sooner rather than later to avoid a surge in demand and prices when mortgage rates fall.
“Find yourself a great broker who knows how to hustle because there’s always a deal to be had — no exceptions to that rule,” Corcoran advised in an interview on ABC News.
If you’re unsure of how to best manage your finances and investments to reach your homeownership goal, then you should consider calling another professional before you get to the point of hiring a broker, a financial advisor.
Advisor.com can help you find someone that’s right for you.
Advisor.com is an online platform that connects you with vetted financial advisors. Just answer a few quick questions about yourself and your finances and the platform will match you with experienced financial professionals best suited to help you develop a plan to achieve your homeownership or retirement goals.
You can view the advisors’ profiles, read past client reviews, and schedule an initial consultation for free with no obligation to hire.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
