The weakened economy has led to fading values in customary investments such as stocks and 401K’s. To cope, many have adopted the common remedy of watching unfortunate circumstances dictate the value of their portfolios. An alternative is to invest in a physical asset, such as real estate. This allows investors to gain equity, feel the satisfaction of living in their investment, and know that it won’t disappear overnight.
Today’s housing market has generated some of the most opportune investment tools in the past 60 years. Some of these tools include historically low interest rates, great affordability rates, and an increase in product quality.
Historically low interest rates:
Whether a home is purchased as a primary residency, or used as a rental, a mortgage can be obtained at a low interest rate. The benefit of a mortgage is that the borrower can leverage the purchase of the home through a loan. Generally this means a home can be obtained with as little as five percent of the actual purchase price (click here for a deeper explanation on leveraging your mortgage).
Great affordability rates:
There are two predominate factors that contribute to the great affordability rates we are currently experiencing. First, home prices have fallen as home builders and suppliers have lowered their profit margins. Second, as a result of lower interest rates, homebuyers are able to afford better homes at lower prices. A monthly mortgage of $1,000 enables the purchase of a better home today, than it did in 2006.
Increase in product quality:
When determining the location of a home, beware of getting trapped in the fallacy that square footage determines value. Although square footage is important for feasibility reasons, the quality of a home and its location will contribute significantly more to the levels of enjoyment and resale value. Try to keep in mind the old adage – quality, not quantity.
One of the greatest ways to add value to a residential investment is to find great neighbors and excellent community amenities. When the time comes to resale the property, potential buyers will be willing to perform quicker and pay more if they see the benefits of a great community.
As Utah’s number one home builder for the past 25 years, Ivory Homes is able to provide an array of communities that are desirable to a variety of home buyers. Ivory features condominiums in downtown Salt Lake, townhomes across the state of Utah, estate homes on golf courses, and single family homes in great neighborhoods. When considering the advantages of investing in real estate, feel free to contact any Ivory Homes consultant to assist with the process.
Written by: Rick Day