Redfin recently released a report on how the prices of homes fell through July 20, 2022. Most buyers cut their asking price in the 97 US metropolitan areas. According to Redfin's study, Boise, ID, saw the highest percentage decline in July, with home prices dropping to 69.7 percent, a massive increase in comparison to 29.6 percent during the same time frame a year earlier.
The median proportion of declines in home prices for July 20, 2022, was 32.3 percent. Redfin blames the drop in rising mortgage rates that reduced the purchasing capacity of homeowners and real property investors. Another reason is a decline in the demand for housing and an increase in the inventory of housing.
However, Redfin advises buyers that price drops are likely to flatten out because sellers adapt to the changing market. Pendelton suggested sellers price their homes in a way that is appropriate and logical. It is essential to recognize that the market has been cooling and will take more than 30 days for the sale.
Affordable Housing Is Once Again Within Reach
This week, we wrote on our coverage of the National Association of Home Builders (NAHB) list of areas with the lowest cost of housing. News regarding the latest findings by Redfin has real estate developers and home buyers feeling a little content as affordability in housing is once again within reach.
Following the release of NAHB's list of the most affordable real property marketplaces, Redfin gives us the joyous news that, at the very least, 97 of the major markets are seeing home price declines. Investors will be happy to hear about July's home prices with arms wide open because they can explore possibilities they've never thought of previously.
The top ten metros in Redfin's report offer investors many income-generating opportunities. The amount they make from investing in a property depends on their investment strategy. However, since the cost of homes is decreasing in many cities across the country, investors can make investments with more confidence knowing they can locate low-cost investment properties that can provide greater returns on their investment.
Of course, you'll be required to conduct thorough due diligence to ensure you have the most bang for your money. This involves collecting as much information and information as you can about specific markets in order to perform an analysis of investment properties.
The excellent feature of modern real estate investing is that websites for real estate can make the process simpler and more efficient. A website can help many investors find the best properties for income and make the most profitable investment decisions.
What Does This Mean for Real Estate Investors?
The fall in home prices is a different thing for real estate property investors. It all depends on your investment objectives and your strategies for the coming days.
Most people interested in real estate investing are enthusiastic about such changes, and we've witnessed the speed at which home prices shot up in the last year. The value of a house will always increase as time passes; however, it's an enjoyable experience when investors are in a situation that has home prices easily accessible.
In all cases, regardless of your chosen strategy, you will reap the benefits of the lower cost of homes. The purchase of an investment property is more affordable than in the past. Lowering your expenses on investment is possible since the current price of homes directly affects the amount you pay for your down payment and mortgage rates.
Different Strokes for Different Folks
If you're considering buying property to make an income, this is the best time to invest because, in 2022, the US property market will be cooling. The amount you can earn on an investment property will depend on your strategy. You can decide to sell houses, lease the properties out or opt for an approach known as the BRRRR strategy. Each method will produce different outcomes.
Fix and flips can cost you more in the capital. What you save on the cost of your home can be redirected into improvement and rehabilitation. Like the fix-and-flip method, it typically takes several months before an investor can let the house go. In the meantime, the market will likely already have changed. Prices for homes could increase or decrease based on a variety of aspects.
However, renting property investors might be a little more successful than flippers who buy houses since rentals can yield long-term benefits. The lower prices for homes currently will probably generate higher dollar-for-dollar returns over the long run, particularly when the rental market is picking up. In the end, the amount you can earn from the property you purchase at lower prices now will depend on the strategy you choose to use.
Top 5 Metro Areas with the Largest Drop in Home Prices in July 2022
For investors in real estate looking to profit from the downtrend in the July prices of homes, Here is the data for the top five markets on Redfin's list of the most significant price decreases:
1. Boise, ID
Median Property Price: $693,026
Average Price per Square Foot: $443
Days on Market: 54
Monthly Traditional Rental Income: $1,399
Traditional Cash on Cash Return: 0.44%
Traditional Cap Rate: 0.45%
Price to Rent Ratio: 41 (high)
Monthly Airbnb Rental Income: $2,356
Airbnb Cash on Cash Return: 1.15%
Airbnb Cap Rate: 1.17%
Airbnb Daily Rate: $132
Airbnb Occupancy Rate: 54%
Walk Score: 36
2. Denver, CO
Median Property Price: $633,779
Average Price per Square Foot: $574
Days on Market: 43
Monthly Traditional Rental Income: $2,301
Traditional Cash on Cash Return: 1.73%
Traditional Cap Rate: 1.76%
Price to Rent Ratio: 23 (high)
Monthly Airbnb Rental Income: $3,201
Airbnb Cash on Cash Return: 2.06%
Airbnb Cap Rate: 2.09%
Airbnb Daily Rate: $182
Airbnb Occupancy Rate: 62%
Walk Score: 53
3. Salt Lake City, UT
Median Property Price: $698,604
Average Price per Square Foot: $423
Days on Market: 45
Monthly Traditional Rental Income: $1,487
Traditional Cash on Cash Return: 0.84%
Traditional Cap Rate: 0.86%
Price to Rent Ratio: 39 (high)
Monthly Airbnb Rental Income: $2,897
Airbnb Cash on Cash Return: 2.22%
Airbnb Cap Rate: 2.26%
Airbnb Daily Rate: $129
Airbnb Occupancy Rate: 58%
Walk Score: 48
4. Tacoma, WA
Median Property Price: $568,180
Average Price per Square Foot: $322
Days on Market: 58
Monthly Traditional Rental Income: $1,405
Traditional Cash on Cash Return: 0.80%
Traditional Cap Rate: 0.81%
Price to Rent Ratio: 34 (high)
Monthly Airbnb Rental Income: $3,005
Airbnb Cash on Cash Return: 2.69%
Airbnb Cap Rate: 2.74%
Airbnb Daily Rate: $146
Airbnb Occupancy Rate: 63%
Walk Score: 41
5. Tampa, FL
Median Property Price: $610,617
Average Price per Square Foot: $341
Days on Market: 76
Monthly Traditional Rental Income: $2,323
Traditional Cash on Cash Return: 2.65%
Traditional Cap Rate: 2.71%
Price to Rent Ratio: 22 (high)
Monthly Airbnb Rental Income: $2,491
Airbnb Cash on Cash Return: 1.70%
Airbnb Cap Rate: 1.74%
Airbnb Daily Rate: $145
Airbnb Occupancy Rate: 46%
Walk Score: 47
Wrapping It Up
Real estate was designed to either stagnate or fall. We're seeing price declines across the US because of rising mortgage rates, a decrease in demand, and more inventories.
Investors ought to take advantage of the trend of decline in home prices in July. With the assistance of an online platform for real estate, you will be able to find the perfect rental property that is within your budget and helps you meet your investment goals.
If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.