5 at 5: Your Daily Digest for Real Estate Investing, 3/19/21
Mortgage Rates And The Fed, House Flipping Sees A Slight Flop In 2020, New York, New York: Want To Be A Part Of It?
In today’s news
Fed plans keep interest rates low. So why are mortgage rates continuing to rise?
The Federal Reserve plans to stay on course to keep interest rates down – but that’s not exactly music to homebuyers’ ears.
The Take Away Millionacres: Realtor.com explains why what the Fed does with its policy rates doesn’t necessarily translate into mortgage rates. Since both real estate investors are heavily involved, this is good read to better understand their relationship.
A mortgage rate of 3% may be the new norm
Rising mortgage rates usually mean a bouncing economy, and although mortgage applications are falling week after week, some key economists say the interest rate is still low enough to “keep market interest” for many potential buyers.
The Millionacres Takeaway: Not only that, this article says, if interest rates are a little higher it could help cool the strong demand that has outperformed the market’s ability to supply supply for months. It looks like it will be a seller’s market for some time to come.
House flipping was a minor flop in 2020
Individual investors who found good business difficult to find and profits difficult to make were not alone. ATTOM Data Solutions’ year-end 2020 Home Flipping report shows that both revenue and profit margins in the US have declined over the past year.
The Millionacres Takeaway: ATTOM’s numbers say the average flip was still enough for many to make a respectable profit, but the overall ROI definitely went down. Whether this was an anomaly or a trend remains to be seen as the year progresses.
Today on Millionacres
Where will Empire State Realty Trust be in 3 years?
The Empire State Realty Trust (NYSE: ESRT) depends on an over-focused portfolio and could be a candidate for more aggressive investors looking for a turnaround game.
The Millionacres Takeaway: This is an interesting Real Estate Investment Trust (REIT). As our Reuben Gregg Brewer points out, he doesn’t have to pay dividends because he’s not making any money. So it’s not. But the stock price itself is a focus for management and that is encouraging right now as they are now taking strategic steps that could pay off later.
New York’s Most Wealthy City in the World for Real Estate – Good for Investors?
A recent study by Wealth-X found that New York City is home to most of the richest people in the world, making it the richest city for real estate. How does this play out for the everyday investor?
The Take Away Millionacres: This concentration of wealth can help fuel the city’s recovery, support the return of higher rental prices, and potentially increase property values over time. But, as our Liz Brumer points out, as a real estate investor in New York City you need to understand your target market in depth, how to best source your deals, and how to maximize your returns. Nothing has changed there.