Mortgage rates and the Fed, house flipping sees mild flop in 2020, New York, New York: Want to be a part of it?
In Today’s News
The Millionacres takeaway: Realtor.com explains here why what the Fed does with its benchmark rates doesn’t necessarily translate to mortgage rates. Since both affect real estate investors greatly, this is a good read to help understand their relationship.
Rising mortgage rates typically signify a recovering economy, and despite applications for mortgages dropping week over week, according to this HousingWire piece, some key economists say that rate is still low enough to “sustain market interest for many potential buyers.”
The Millionacres takeaway: Not only that, this piece posits, interest rates being a bit higher might help cool fierce demand that’s outstripped for months the market’s ability to provide the supply. Still a seller’s market for some time to come, it looks like.
Individual investors who found good deals hard to find and profits hard to make were not alone. ATTOM Data Solutions’ 2020 Year-End Home Flipping Report shows sales and profit margins both declined across the U.S. last year.
The Millionacres takeaway: ATTOM’s number-crunchers say the average flip was still enough for many to make a respectable profit, but ROI overall definitely dipped. Whether that was an anomaly or a trend will reveal itself as the year goes on.
Today on Millionacres
Empire State Realty Trust (NYSE: ESRT) depends on an uber-concentrated portfolio and could be a candidate for more aggressive investors looking for a turnaround play.
The Millionacres takeaway: This is an interesting real estate investment trust (REIT) to consider. As our Reuben Gregg Brewer points out, because it’s not making money right now, it doesn’t have to pay dividends. So, it’s not. But the share price itself is a focus for management, and that’s showing promise right now as they make strategic moves now that could pay dividends later.
A recent study by Wealth-X found New York City is home to the largest number of the world’s wealthiest people, making it the wealthiest city for real estate. So how does this play out for the everyday investor?
The Millionacres takeaway: That concentration of wealth can help fuel the city’s recovery, support the return of higher rent prices, and possibly raise real estate values over time. But, as our Liz Brumer points out, as a real estate investor in New York City of any depth pockets, you still need to know your target market, how to best source your deals, and how to maximize your returns. Nothing’s changed there.
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