FULL DAY LIVE REAL ESTATE INVESTING EVENT AT MY NEW PROPERTY OCTOBER 27TH: https://goo.gl/QfeS1F
Real Estate Mortgage Interest Rates just hit 8-year highs and began passing 5%…here’s what I think this means for the future of real estate values. Enjoy! Add me on Snapchat/Instagram: GPStephan
Join the private Real Estate Facebook Group:
https://www.facebook.com/groups/therealestatemillionairemastermind/
Get $50 OFF FOR A LIMITED TIME: Code THANKYOU50 - The Real Estate Agent Academy: Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $120 million in sales: https://goo.gl/UFpi4c
Within recent weeks, the FED increased interest rates WAY faster than I expected they would; This is the HIGHEST mortgage rate we’ve seen in 8 years, since real estate hit its bottom in 2010. Now the reasons WHY the FED raised rates seems fairly logical to me - for the last few years, interest rates were pretty much in NEGATIVE territory, meaning they’re losing money just by loaning out money.
First, cheap rates are meant to help the economy. Lowering interest rates made money cheaper to borrow, which meant more money could flow freely through the economy through cheap lending, and that in turn, meant more money in our pockets, which means more money we can spend. This works in the short term, and there’s nothing wrong with doing this for a little while…but eventually we battle fears of inflation, which means our money, over time, continues to have less and less purchasing power.
Secondly, interest rates are only raised in a healthy economy. It’s these types of markets that can handle a rate increase like we’ve seen.
Third, the new tax plan caused businesses and individuals to keep a LOT more money, and by doing so, it became that much more profitable. In return, stock prices soared knowing that companies would have a lot more profit at the end of the day.
So lets talk about how this specifically relates to real estate.
First point, inflation…from a real estate person’s perspective, we LOVE inflation. This is because the value of your asset or property generally goes UP, while the amount of debt you have stays the exact same and the AMOUNT of that debt actually goes down. But this is bad for everything else.
Second point, the higher the interest rate, the more expensive it becomes to own real estate or borrow money.
Third point, I should break down into three thoughts:
People can’t bid as aggressively as they once were able to.
Second, over the last year, many of the buyers were buying because they had a sense of urgency to lock in an interest rate before they went up.
Third, we’ll continue to see a lack of inventory which will keep prices from falling too dramatically. Most people who bought real estate did so with a significant amount of money down, with great credit, and sufficient income…the variable here is that most of these people took out an interest rate much lower than they’d pay now, and because of that, if they sold, they’d give up a historically low mortgage.
This leads me to think that a few things are likely to happen. Mainly that this is a GOOD thing for landlords and the rental market. I think we’ll see a lot of buyers sitting on the sidelines just waiting to see what happens and if affordability gets better. I think we’ll get a bigger selection of tenants from the buyers that aren’t buying.
I think we may also see more landlords deciding to RENT their homes out instead of sell. This means we’ll continue to see less inventory on the market, as selling just doesn’t make sense for people with 30-year mortgages.
For business inquiries or paid one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Favorite Credit Cards:
Chase Sapphire Reserve - https://goo.gl/sT68EC
American Express Platinum - https://goo.gl/C9n4e3
Real Estate Mortgage Interest Rates just hit 8-year highs and began passing 5%…here’s what I think this means for the future of real estate values. Enjoy! Add me on Snapchat/Instagram: GPStephan
Join the private Real Estate Facebook Group:
https://www.facebook.com/groups/therealestatemillionairemastermind/
Get $50 OFF FOR A LIMITED TIME: Code THANKYOU50 - The Real Estate Agent Academy: Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $120 million in sales: https://goo.gl/UFpi4c
Within recent weeks, the FED increased interest rates WAY faster than I expected they would; This is the HIGHEST mortgage rate we’ve seen in 8 years, since real estate hit its bottom in 2010. Now the reasons WHY the FED raised rates seems fairly logical to me - for the last few years, interest rates were pretty much in NEGATIVE territory, meaning they’re losing money just by loaning out money.
First, cheap rates are meant to help the economy. Lowering interest rates made money cheaper to borrow, which meant more money could flow freely through the economy through cheap lending, and that in turn, meant more money in our pockets, which means more money we can spend. This works in the short term, and there’s nothing wrong with doing this for a little while…but eventually we battle fears of inflation, which means our money, over time, continues to have less and less purchasing power.
Secondly, interest rates are only raised in a healthy economy. It’s these types of markets that can handle a rate increase like we’ve seen.
Third, the new tax plan caused businesses and individuals to keep a LOT more money, and by doing so, it became that much more profitable. In return, stock prices soared knowing that companies would have a lot more profit at the end of the day.
So lets talk about how this specifically relates to real estate.
First point, inflation…from a real estate person’s perspective, we LOVE inflation. This is because the value of your asset or property generally goes UP, while the amount of debt you have stays the exact same and the AMOUNT of that debt actually goes down. But this is bad for everything else.
Second point, the higher the interest rate, the more expensive it becomes to own real estate or borrow money.
Third point, I should break down into three thoughts:
People can’t bid as aggressively as they once were able to.
Second, over the last year, many of the buyers were buying because they had a sense of urgency to lock in an interest rate before they went up.
Third, we’ll continue to see a lack of inventory which will keep prices from falling too dramatically. Most people who bought real estate did so with a significant amount of money down, with great credit, and sufficient income…the variable here is that most of these people took out an interest rate much lower than they’d pay now, and because of that, if they sold, they’d give up a historically low mortgage.
This leads me to think that a few things are likely to happen. Mainly that this is a GOOD thing for landlords and the rental market. I think we’ll see a lot of buyers sitting on the sidelines just waiting to see what happens and if affordability gets better. I think we’ll get a bigger selection of tenants from the buyers that aren’t buying.
I think we may also see more landlords deciding to RENT their homes out instead of sell. This means we’ll continue to see less inventory on the market, as selling just doesn’t make sense for people with 30-year mortgages.
For business inquiries or paid one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Favorite Credit Cards:
Chase Sapphire Reserve - https://goo.gl/sT68EC
American Express Platinum - https://goo.gl/C9n4e3
I live in Denver, an area that's been hard hit with crippling real estate prices. Low interest rates are great but not when the property you're buying is way over valued. I understand that you're keeping these properties long term but for buyers that aren't, they're screwed. Many markets are already stretched when it comes to rent prices. Denver being one of them. Eventually something has to go bust.
I like to see 12 year olds talk business.
Well here's the other thing as well, sometimes yeah you might have a higher interest rate but if the interest rates lower I'll take an advantage to that and refinance. But sometimes you still can lock in a really low payment too. Gotta start somewhere. Profit might not be as high but as you say look at the long term results and goals. Work the numbers.
Investment property's are 1% higher. How are you coming up with these numbers? 3.35% for an investment property?
Good news for the public, Graham shares his real estate insight again.
Is that an investment property? How did you get 4.5% rate? Here in SC is close to 6% for investment properties.
Have you thought of airbnbing your properties?
Very interesting video. Very insightful watching you speak about the market.
I think the rate you’re going to see that 5%+ interest rate is going to come a lot faster than you think. Just a year ago it was about 4% and every point in interest adds like 10% to the carries mortgage. Carrying the same 30 year mortgage on the same property was about 17% to carry than it was a year ago. Wait til you see rates poppin to 6% a year from now with home prices still co to Hong to appreciate is an affordability double whammy
lower interest rates to buy real estate cuz thats the only thing banks will give u money 4
So, I shouldn't buy a house?
When did you hire a management company to manage your property?
You're awesome man. Wish I could join the class. Next time!
Baby boomers are about to enter old folks homes and/or die. This leaves a lot of houses. Wont this drop rent rates?
so you got 10 doors, make a video talking about your cash flow. be transparent we wanna see how well its doing for you. motivation.
and so ur not going to be buying investment homes anymore now that its at 5%??? what will you invest in…
Please stop publishing fake news! Bread in Zimbabwe standard price is $1.10 not your $5 trillion.
I would LOVE it, if you could make a video to expand your prediction
Yea but when interest rates rise nobody buys so it drives prices down it’s all the same crap
Congrats
What is your take on buying vacant lots? Would you pay cash or take out a loan?
Can the economy crash already
As a retired Realtor I always like to mention the fact that back in the early 80's I actually sold a property to a buyer and he closed the sale at a mortgage interest rate of 21%. Yes! He later refinanced this insane rate at a very low 13%.
People today can not believe that there was a period of time when getting a 10% mortgage interest rate was like winning the lottery. Go back to the 80's.
Interest rates going up means people will be priced out of houses that are already unaffordable. This means housing becomes less affordable by pricing people out of the market which means less buyers. Less buyers with the same or greater supply means the demand will go down, when demand goes down, prices come down. Now is not the time to buy real estate.
So should I buy a house or wait? I plan to purchase around 2 properties next year.
Silly to worry about locking in a low interest rate on an overpriced property lmao
Hey Graham, does it cost anything to attend and how do you sign up?
Of you had 300k to buy a unit would you buy for cash or take a loan? Why ?what would paying interest benefit you
I was really hoping you'd say Come meet Meet Kevin! 🙂 How do I get one of those ninja loans? X) Lol
This definitely gonna sound like a dumb question but could his impact ye Canadian market at all?
I know this is random but do you have a cleaning lady to clean your house so you can have more time doing other stuff that makes you money and are you planning on getting a personal chef?
We pay 10.5% on homes here in south Africa. Wish I could get 5%