If you own a piece of real estate or are thinking of becoming a home owner, whether it’s to live in or for an investment, then you are probably wondering where the market is headed.
The answer is…I don’t know. I am a California private money lender who strictly lends on real estate. If we knew exactly when the market will peak and also when the bottom is at the bottom in a real estate cycle, we would all be retired living on an island somewhere.
Since we really don’t know when if the real estate market will keep going up or will it peak and crash like it did in 2006, I am going to give you a few things to consider.
Fed Chairman Janet Yellen just raised interest rates the first time in almost 10 years. That seemed like a big (yawn) announcement. Everyone was expecting it and it only got raised by ¼ of a percentage point. So this was what everyone was waiting for years for? Now, if they raise interest rates by ½ point the next five times the Fed meets, then that’s time for some serious interest rate discussion.
The housing and apartment rental markets at this time are still going up, at least in California. If the rents are still going up, then that could force renters who were sitting on the sidelines to finally get out and buy a place. In the next 6 months or so, there doesn’t appear to be any relief in site where the rents will stabilize or start going down.
Jobs and Income
It’s hard to believe any report that comes out from the government about how many jobs were created. Months down the road, it seems they always change the jobs report that they gave us 3 months ago. It does appear though, that people are working and no one industry except US manufacturing is laying off people.
So the thing we can expect in the future is uncertainty. Be prepared to allow for the real estate market to eventually go down some. Now not many people can prepare for a market crash like the crash of 2007-2009 but at least if it happens again, we will have some experience from the previous crash.
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