Have you heard about the real estate Gold Rush that's about to happen?
If not, let me fill you in. Even though the COVID-19 pandemic created a global economic recession, real estate values have skyrocketed. In fact, between September 2019 and September 2020, it’s estimated that property owners gained $1 trillion of equity in their homes due to the increased demand and low supply of available housing.
Not everyone spent their stimulus money. Look at all of the economic data and you'll see the savings rates are up. Part of the Gold Rush will come from money hitting the market from all of these pent-up savings.
As Americans start to emerge from their COVID-19 hibernations, they are ready to spend the money they’ve saved during the pandemic. Stimulus checks and higher wages are also contributing to the desire to spend and start getting life back to normal. This means that people who were thinking about buying a house before the pandemic have decided to take the plunge, which means more demand and higher prices.
The pandemic led to a sharp increase in remote work, with many high-paid employees working from home for the first time. As people started spending more time at home, many started to desire more space. Many of the benefits of living in an urban environment (such as proximity to restaurants and cultural venues) became moot during COVID closures. Families swarmed the suburbs for the extra square footage, driving the housing demand in these areas even higher.
As COVID vaccines roll out, people are going back to work. Daily life is looking a little more like it used to. Once people start to see this they will start to feel more secure.
Security means they're going to start spending money. When that happens it's going to cause asset prices to spike. Count on it.
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I'm calling this a "Real Estate Gold Rush" because you can take on a ton of debt right now to finance a single-family home or other property. The value of your investment will increase dramatically once the money starts to flood into the market. You'll get the appreciation and all of the debt will be easy to pay off because (thanks to inflation) you can pay off your debt with cheaper dollars.
In fact, housing prices are already shooting up. Between November 2019 and November 2020, housing prices rose 9.5%. The average home value at the end of 2019 was $245K; by 2021, that number had risen to $266K. That’s a lot of extra Ks in a very short time, and prices will continue to rise as demand increases.
As the housing market becomes more competitive, prospective homebuyers may choose to rent instead. Given the overall housing shortage across the country, as the demand for rental properties increases, market rents will also rise.
Since people are getting back to work and the economy is revving up, rents are going to get higher. You can leverage a bank loan to finance a property, you get all the appreciation AND you're practically guaranteed more rental income in the near future.
GOLD RUSH! This is the time to buy as many rental properties as you can.
Let me guess. You have heard this unprecedented rise in prices called a "real estate bubble," right? In reality, it's absolutely not a bubble. It's a new reality—a new baseline—the new normal.
Don't believe me? The professional investor communities at the highest level are leveraging all of their assets to the tilt to buy as many assets as they possibly can because they know the Gold Rush is going to keep going at this rate or an accelerated rate for at least the next year or two years.
Right now most real estate investors are wondering "What should I do to get there as soon as possible?" Now is the time to buy, but if you’re unsure of what steps you should take, consulting with a real estate investment attorney should be your first step.
Partnering with an experienced professional can help you ensure that you don’t miss out on the 2021 Real Estate Gold Rush.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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