Buyers should ‘think outside the box’
Homebuyers — particularly first-timers who are committed to getting a foothold on the housing ladder — “should think outside the box,” according to Zhao.
“Although new listings are ticking up slightly, inventory is still near record lows as homeowners hang onto their low mortgage rates — and that’s propping up prices.”
He said first-time buyers to consider options that are less expensive than a single-family home, like “a condo or a townhouse.” You may also have to look at “moving to a more affordable part of the country, or a more affordable suburb.”
The income needed to buy a home has risen in all major U.S. metropolitan areas, according to the Redfin report, with the biggest uptick in Miami, FL, and the smallest in Austin, TX. Redfin noted the necessary income has increased least in pandemic homebuying hotspots, like Boise, ID, Salt Lake City, UT, Fort Worth, TX and Lakeland, FL.
Once you find a home you want to buy, you need to become a savvy shopper. When facing mortgage rates of close to 8%, it can really pay to shop around. Earlier this year, mortgage giant Freddie Mac said homebuyers can potentially save $600-$1,200 annually by applying for mortgages from multiple lenders — worthwhile savings in today’s tricky economic climate.
The same can be said for essential expenses like insurance once you’ve bought your home. Don’t just settle for the first home insurance quote you get. Shop around and compare multiple options the best coverage and the best price for you.
If you’ve considered all of that and you’d still rather ride out this wave, there are other worthwhile ways to invest in real estate.
Stop overpaying for home insurance
Home insurance is an essential expense – one that can often be pricey. You can lower your monthly recurring expenses by finding a more economical alternative for home insurance.
SmartFinancial can help you do just that. SmartFinancial’s online marketplace of vetted home insurance providers allows you to quickly shop around for rates from the country’s top insurance companies, and ensure you’re paying the lowest price possible for your home insurance.Explore better rates
Real estate investing alternatives
Real estate investment trusts
Investing in a real estate investment trust (REIT) is a way to profit from the real estate market without having to buy a house or take on the stress of being a landlord.
REITs are publicly traded companies that own income-producing real estate like apartment buildings, shopping centers and office towers. They collect rent from tenants and pass that rent to shareholders in the form of regular dividend payments.
Generally, REITs are described as high-return investments that provide solid dividends and the potential for moderate, long-term capital appreciation.
Also, as REITs are publicly traded, you can buy or sell shares any time and your investment can be as little or as large as you want — unlike buying a house, which usually requires a hefty down payment followed by a mortgage.
Crowdfunding refers to the practice of funding a project by raising small amounts of money from a large number of people. This can include real estate.
Through a crowdfunding platform, you can buy a percentage of physical real estate — from rental properties to commercial properties.
Some options are targeted at accredited investors and can have higher minimum investments that can reach tens of thousands of dollars.
If you’re not an accredited investor, there are multiple platforms let you invest small sums, even as low as $100. You can even buy a stake in digital real estate.
Sponsors of crowdfunded real estate deals usually charge fees to investors — typically in the range of 0.5% to 2.5% of whatever you’ve invested. These platforms make real estate investing more accessible to the general public by simplifying the process and lowering the barrier to entry.
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