2018 closed with the stock market historically low and the entire year was a bit of a roller coaster ride. Many of our clients ask our opinion on the stock market as it relates to real estate and here is what we tell them…
- Buy more real estate. Even when stocks fluctuate, real estate continues to be a solid investment that appreciates over time. Of even further interest is the fact that we are due for a correction having been on a 10 year long protracted rise. When this correction occurs sometime in the next 2 years, make sure you are in prime buying position so that you can take advantage of lower than normal prices.
- Interest rates are still low. Yes they have moved up over the past year but only incrementally. The rates are still remarkably low in comparison to the historical average.
- Businesses come and go but a house will remain standing. Property has a lasting value. The same cannot be said of stocks given todays market volatility.
- Remembering the “long haul”. Both stocks and real estate are usually best served as long term investments. We try to remind our clients that what is important is the price they paid and if they plan on using the property as their primary residence, ownership will likely span years which will, in turn, result in appreciation.
- Diversification is key. Long term investing should always employ diversification. Real Estate is just one of what should be a multi pronged approach to long term investing.
- If you can, then you should. Waiting for the perfect market could cost you money. We know that interest rates will continue to climb. This could vastly change your mortgage payment and may put you in a lower price point. Take advantage of where rates are now and lock your investment in.
We often wish we had a crystal ball in real estate but of course, we don’t. We must use the data provided by historical sales coupled with the overall market gyrations to help guide our clients in making the best decision for them. Real estate stands the test of time and will always be a strong, long term investment.