You might feel like 2022 hasn’t been the best year. Inflation rates are at an all-time high, President Joe Biden’s approval rating is at an all-time low, an everything recession feels inevitable — the list goes on. Seemingly the only thing providing some humor in news cycles are the memes retweeted by billionaire Elon Musk.
However, Aug. 4, 2022, brought some refreshing news, and a bit of optimism. For the first time since April 7, 2022, home interest rates (30-year fixed) fell below 5%. Checking in at 4.99%, the rate is trending in the right direction, down from 5.3% the week prior.
While things remain volatile, it’s hard not to get excited about that news. Between Musk’s doom and gloom outlook on the housing market, and NAHB CEO Jerry Howard’s description of the battle between interest rates and construction costs, it’s hard not to look at a drop in mortgage rates as an opportunity. Billionaire Jay-Z “gotta get it while the getting's good. Gotta strike while the iron's hot.” So, how can you do that?
Buy a home: The most direct impact the drop in mortgage rates will have is on you, the buyer. Buying a home now may feel scary, but if you have the means, it could prove fruitful. Compare home rates in 2008 to now. Land is scarce and there is only so much real estate to go around. If you are fortunate enough to be in the position to buy a home or upgrade your permanent home, consider acting on it now. The rate dip could allow you to get low rates before they skyrocket. If you’re in the market to purchase a home, consider these popular lenders.
Buy a rental property: If you’ve been smart with your money and can afford it, a rental property may be your best bet. Upgrading a personal home is nice, but it means you still have to sell your own home and lose an asset. Buying a rental property by taking money out of the stock market and putting it into a physical property could prove to be a smart move in the years to come. Not only will you make money on the asset in the long term, you can collect from renters in the meantime. Americans are still willing to spend. Capitalize on this willingness now and consider it leverage against the prospect of a stock market crash. For loans on a rental property, consider these lenders.
Invest in a REIT: - Ok, so you don’t have tens of thousands or hundreds of thousands to throw at an investment property or to upgrade your home. What now? Consider investing in real estate while allowing somebody else to front the money. Real estate investment trusts (REITs) are a way to invest in real estate while simultaneously playing the stock market. Each REIT has its own focus and targets different sectors. Some REITs also offer dividends, an excellent way to minimize stock market drops.
Looking for ways to boost your returns? Check out Benzinga's coverage on Alternative Real Estate Investments:
- This Little Known REIT Has Produced Double-Digit Annual Returns For The Past Five Years
- You Can Become Part-Owner Of This Cash-Flowing Multifamily Real Estate Portfolio
- Like Dividends? Then You’ll Love These High-Yield Investments
Or browse current investment options based on your criteria with Benzinga’s Offering Screener.
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