How Economic News Affects Real Estate Investments

 

Anyone who has ever considered investing in real estate knows that timing is everything. Buy low, sell high – it’s as simple as that, right? Well, not quite. Economic news can have a big impact on real estate prices, and smart investors always stay up to date on the latest developments. Here’s a quick overview of how economic news can affect real estate prices in the multi-family housing sector.

 

Economic news affects real estate investments in a number of ways. Interest rates, inflation, and employment data are just a few of the indicators that can impact the real estate market. In this blog post, we'll take a closer look at how economic news affects real estate investing and what you can do to make sure your portfolio is prepared.

 

Inflationary Pressures affecting  Real Estate 

Inflation is one of the most important indicators that economists track because it can have a significant impact on the economy. When inflation is on the rise, it typically means that prices for goods and services are also on the rise. This is important to keep in mind if you're thinking about investing in real estate because inflation can eat into your profits. For example, let's say you purchase a property for $100,000 and rent it out for $1,000 per month. If inflation increases by 3% over the next year, that would mean your rental income would need to increase to $1,030 per month just to keep up with the rising cost of living. 

 

In addition to affecting your bottom line, inflation can also impact the value of your property. In general, when inflation is on the rise, property values will also increase. This is because as the cost of living goes up, people are willing to pay more for a place to live. As an investor, this can be a good thing because it means your property will be worth more. However, it's important to keep in mind that there is such a thing as "too much" inflation. If prices rise too quickly, it can lead to an economic downturn. So while it's good to keep an eye on inflationary pressures when considering a real estate investment, you don't want to get too caught up in trying to time the market perfectly. 

 

Employment News impacting Real Estate  

Employment data is another important indicator that can affect real estate investing. This is because when more people are employed, they typically spend more money overall which can lead to increased demand for housing. This increased demand can cause prices to rise and may even lead to bidding wars for properties in desirable areas. Conversely, when unemployment is high, people are typically more conservative with their spending which can lead to decreased demand for housing and lower prices as a result. 

While employment data is certainly something you should keep an eye on when considering a real estate investment, it's important not to get too caught up in short-term fluctuations. The reality is that employment often takes time to rebound after an economic recession and vice versa. So while it's helpful to know where things stand currently, you shouldn't base your investment decision solely on employment data. Instead, try to think about how employment trends might affect people's willingness and ability to pay rent over the course of several years. 

 

Economic news has a direct impact on real estate investing. Inflationary pressures can cause prices for goods and services to increase which may eat into your profits as a landlord. Additionally, changes in employment data can impact people's ability and willingness to pay rent which could affect your bottom line over the long term. When considering a real estate investment, it's important to stay up-to-date on economic news so you can make informed decisions about where and when to invest.  To discuss your real estate investment options please call 708-377-6655 to speak to one of our real estate investment specialists.