Is real estate a good investment? It all depends. There are different factors to consider when determining if purchasing a new home is a good, profitable alternative to store-bought investments. The answer to this question, it seems, is always situational.
We would like to offer our insight. Read on and find out if real estate could be the investment of your dreams or a recipe for disaster.
Home Buyer and Seller Trends
While these figures and statistics often fluctuate, there are many key factors that remain constant. Most notably, the average home prices have continued to rise, despite the COVID-19 pandemic, with year-to-date figures up just over 7% from 2020 alone.
The average days on the market for a UK home have decreased by just over 11% from the year 2020, indicating strong demand from buyers. In the US, consumers are spending more money on the overall home-buying process, with 14% of homebuyers paying more than the listed asking price for their property.
Average Dwelling Price Increase
Average dwelling prices across the world are increasing, according to recent statistics. On average, homeowners spend around 5.8% more on their properties compared to the year before. Locally, property prices have risen around 8.7% in the past twelve months.
In London alone, properties are up 8.3% on last year, with the average dwelling price rising to £488,969. This figure has now topped £500k in some areas, with the outer London boroughs of Lewisham, Haringey, and Waltham Forest experiencing the greatest growth.
These figures are a testament to the fact that more and more people are turning to invest in property in order to make money from the real estate market.
International Real Estate Impacts
International real estate impacts have been quantified by critical global statistics. According to UNCTAD’s World Investment Report 2018, Foreign Direct Investment (FDI) in the real estate sector increased by 26% in 2017 while world FDI fell by 23%.
That illustrates the growing importance of the sector in global investment strategies. At the same time, global investment in the real estate sector totaled USD542 billion in 2017, with North America and Europe together taking the majority share.
This data shows a large shift towards investing in real estate, with total global real estate investments reaching an all-time high. Property markets in fast-growing, least-developed countries showed the highest ROI, meaning there are high opportunities for investors to gain from such markets.
Is Real Estate a Good Investment?
Real estate can be a good investment depending on the current market, the goals of the investor, and their ability to make intelligent decisions. For example, if the market is low, then buying a distressed property to fix up and resell can be a great way to make a profit.
Real estate values typically rise over time, providing investors with a steady source of income. Investors can also enjoy several tax advantages, such as the ability to deduct depreciation and interest expenses.
Other benefits include the freedom to set your own rules, rent prices, and timelines, as well as the ability to choose your rent to own condos and more creative investment strategies such as flipping, fix and flips, and vendor financing.
Learn More About Investing in Real Estate Today
So overall, is real estate a good investment? With its consistent returns and high ROI, especially in the long term, it remains a great investment. The many positive stats provide assurance that real estate is a solid investment that can prove to be rewarding and beneficial.
To learn more about real estate investing, reach out to a professional financial advisor.
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