Investors need new options with real estate sales down

August 24, 2023 4

As the summer heatwave blazes on, the U.S. real estate market finds itself in a simmer of its own. According to the National Association of Realtors (NAR), the four major U.S. regions registered a year-on-year sales decline of 16.6% in July 2023.

As explained by NAR, two factors are driving the sales activities down this summer. The decline has illuminated the challenges potential home buyers face when attempting to invest in properties. Firstly, NAR Chief Economist notes, there’s a severe shortage of available inventory. Secondly, and more alarmingly, the high mortgage rates hinder individual investors. With the median price for an existing home up by 1.9% year-on-year in most U.S. regions, investors find themselves struggling for options.

Amidst these hurdles, many Americans are reevaluating their dream of becoming homeowners and exploring innovative ways to turn property purchases into lucrative investments.

The appeal of homeownership has long been a cherished American dream. However, the current landscape presents non-negligible obstacles. Skyrocketing mortgage rates have raised concerns, making the financial commitment to owning a property more daunting than ever. Prospective homeowners are left wondering how they can navigate this financial landscape.

Experts financial advisors, on the other hand, advise potential buyers to thoroughly research and compare real estate investment options. Indeed, amidst the challenges, a silver lining emerges as property purchase evolves into an investment strategy. For those who approach it strategically, real estate can be a lucrative avenue to build wealth and navigate the market slump. Aspiring investors in 2023 are exploring alternative routes to ownership that also yield financial returns.

Real estate syndication

While this may not be the right avenue for aspiring homeowners, syndication is a great option for those who struggle to find their dream investment unit. Multiple accredited investors pool their resources to acquire properties that might be out of reach individually. This approach provides an opportunity to invest in larger, potentially more profitable projects.

Syndications are typically managed by experienced professionals, reducing the hands-on involvement required from individual investors. They receive a portion of the income generated by the property, often in the form of rental income or eventual property appreciation.

Home holiday rentals

American investors are also looking beyond national borders to tap into the potential of cheap properties abroad. The rise of home holiday rentals has allowed investors to capitalize on the popularity of vacation destinations.

By purchasing properties in sought-after areas and renting them out to vacationers, investors can not only benefit from cheaper mortgage rates but also generate extra income. This approach has gained traction due to the flexibility it offers and the potential lucrative returns.

Crowdfunding real estate investment

In the digital age, crowdfunding has transcended its role in startups and creative projects to revolutionize real estate investment. Crowdfunding platforms enable individuals to invest in properties collectives, even with smaller amounts of capital. This democratization of real estate investment has grown increasingly popular among those who lock the liquidity to qualify as accredited investors. As crowdfunding levels the playing field, it allows a wider range of individuals to participate in real estate investments.

While the U.S. housing market faces its fair share of challenges, several avenues are appearing for investors. Combining creativity and strategy, real estate investment can become a gateway to financial stability and growth. Indeed, as the housing market evolves, so too must Americans approaches to building wealth through it.