With all the recent ups and downs, the real estate market looks a lot like a rollercoaster. Rising interest rates and falling housing inventory can make the idea of homebuying seem like a wild ride. How do you know if it’s the right time to invest in a property to live in or rent out?
After weathering decades of market changes, we here at Trilogy have learned a thing or two about the market. In today’s blog, we’d like to share some advice about investing in real estate.
While generally it’s recommended to buy properties when interest rates are low, it’s important to consider the inventory during this time, too. Low rates can heat up a market and drive home prices sky-high, like during the housing boom of 2020-2022. So while some homebuyers may have secured a lower rate for a mortgage, the value of the property may have been over-inflated, causing them to pay more than it was worth. And in some cases, competition could drive property prices beyond what certain homebuyers can afford.
Conversely, when interest rates are higher, demand can be lower. This could force sellers to drop prices, and the potential for buyers to secure a good deal increases. When the interest rate drops later, refinance for a better rate.
Let’s look at an example close to home—Chico. Our neighbor to the west just made a Top 5 list of cities where homes are selling more slowly compared to 2022. Because houses are sitting on the market twice as long as they were a year ago, there’s more bargaining power for buyers.
The short answer is: yes! Our little mountain town of Paradise is known for its resilience as well as its beauty. Building and rebuilding homes continues, with building statistics showing almost 3,000 building permits received and nearly 2,000 homes rebuilt. More and more people are returning to Paradise and investing in real estate here.
Whether buying a property to be used as a home or as a rental, Paradise is a good investment. For investors, buying or building a rental unit helps defer capital gains taxes and provides housing for current and future residents. New homeowners can take advantage of first-time homeowner loans to help with a purchase. The Town of Paradise even offers a special deferred, low-interest loan to help bridge the gap between what a borrower can afford and what they need for a loan. Finally, the Rebuild Paradise Foundation helps connect residents wishing to rebuild with grants and other essential resources.
If you’re thinking of building a home for yourself or a rental unit as an investment, contact us at Trilogy. With over 50 years of experience building on the Ridge, you can feel confident about the quality of our work. And our True Quote process shows you exactly how much the build will cost, ensuring your peace of mind.