What is Passive Real Estate Investing?

Passive real estate investing is a way to invest in real estate to augment income considerably well without having to necessarily stress out one’s self. You are not actively involved in generating profits or income from real estate; you are a passive investor.

What is Passive Real Estate Investing?

Passive real estate investing is a way to invest in real estate to augment income considerably well without having to necessarily stress out one’s self. You are not actively involved in generating profits or income from real estate; you are a passive investor.

‍There’s more to real estate investing than just buying distressed properties and flipping them for a profit. You need to consider the long-term value of the properties you are buying and the capitalization rate of return that is expected from your real estate investments. If you are serious about this type of investing, then you need to understand how to improve your chances of success. This article will provide some great tips so that you can make money in the real estate industry.

There are two basic ways to make a profit in passive real estate investing; one of them is direct income from rentals. Once the income surpasses the expenditures, then you are on the winning side.  The other way you can benefit is by increasing the value of your investment property and mining the equity that you generate. You either can take low-interest loans against the equity or sell your investment property for a profit and reinvest by buying more investment properties.

5 Passive Real Estate Investing Tips to Help You Make Money

1. Research is key

Many people will only venture into real estate after they have already discovered that they enjoy it. However, the research phase needs to be done very early on in order to have a high chance of success. If you are just going to throw money at a project, it is unlikely that you will get very far. You will probably lose money even if the property appreciates in value by a factor of 10. Most real estate investment ideas will require some level of research in order to make sure that you are getting good value for your money.

2. Know the Market

As mentioned above, some of the best real estate investments are in areas that are experiencing strong growth. If you are buying a foreclosure or a bank-owned property, then you will most likely find that there is a large pool of potential tenants. If the rental market is strong, then you could potentially make a nice profit by taking advantage of low vacancy rates to fill a property. If the market is weak, then you could potentially lose money if you are not careful. I

It is best to know the market well in order to make sure that you are getting good value for your money when you invest in real estate. The market is always changing, so it is important to know what has been going on recently in order to make informed investment decisions. The best way to do this is to get on the ground and see what is happening in the local real estate markets.

3. Know The Different Types Of Real Estate Investing

There are many different types of real estate investing, and it is important to know which ones are best for you. There are three main categories when it comes to real estate investing: fixed assets, discretionary, and real estate investment trusts. This is because these are the main types of real estate that you will find in most residential and commercial real estate projects. What differentiates one type of real estate investing from another is the amount of risk that is associated with each type.

Investing in REITs

You can invest in REITs in a variety of different ways, including purchasing shares of publicly traded REIT stocks, mutual funds, and exchange-traded funds. REITs generally own and/or manage income-producing commercial real estate, whether it's the properties themselves or the mortgages on those properties.

You can invest in Retail REITs, Residential REITs, Healthcare REITs, Office REITs, and Mortgage REITs. REITs will provide you with high dividend yields along with moderate long-term capital appreciation. They can become an excellent addition to your diversified investment portfolio. You must find companies that have done a good job historically in giving dividends to investors.

Real Estate Crowdfunding

The New Opportunity for Passive Real Estate Investing is in Crowdfunding. Since 2012, over 100+ real estate crowdfunding sites have come into existence. Websites like RealtyShares allow investors to access different real estate projects. Investors can get access to different property types and locations across the country. You can invest in real estate alongside thousands of savvy investors. Through RealtyShares, you can invest as little as $5000 and choose over 1500 funded deals.

Investing In a Turnkey Rental Property

Investing in a turnkey rental property is one of the wisest investment decisions you can take today if you are in search of how to make passive income in real estate. A turnkey rental property can be competently managed through a property management company. Therefore, your investment in turnkey rental properties is relatively safe, secure, and hassle-free. In turnkey property investing, everything is done for you.

You would simply purchase an investment property, let the professionals oversee it, and collect your monthly cash flow income, while your tenants would increase your equity or pay off your mortgage. After purchasing the property, you leave every other thing to a turnkey property management company and expect your monthly passive income to flow into your bank account. In addition, the firm ensures that your property never remains vacant.

Finding good tenants on your own can be a big hassle. A good tenant will take care of your property and pay you to rent on time. A bad or disgruntled tenant can cause havoc on your property in many ways and leave it in ruins. Another way of going about passive real estate investing is to hire people who are trustworthy to help you in locating properties in good neighborhoods.

Then, call on a good and experienced contractor to help you renovate the property and do every other necessary repair so that the property can become very attractive before you put it on market for rent. Now you can contract a trusted property management company for collecting rent, handle repairs and maintenance, addressing complaints of your tenants, and sending money to your bank account every month. Isn't it an easy way to generate a passive income?

Click on the link to know all the benefits of investing in turnkey rental properties, which is one of the best ways of passive real estate investing. As much as passive real estate investing looks very good and attractive in theory, it requires time, dedication, and most importantly, taking the right steps before it starts yielding profits.

4. Find The Right Property For The Right Transaction

You will never know if you have all the right properties to invest in and the right people to partner with. It is best to find a real estate partner with whom you are comfortable sharing some of your hard-earned money. You can’t just throw money at a project and hope for the best. If you want to make sure that you are getting good value for your money, then you will need to work hard to find the right project for the right price.

In many cases, you will have to do some serious research in order to find the right project. It is also important to remember that no two real estate transactions will be identical. There might be a market that is oversaturated in a certain type of property, and you may have to look in another location. The important thing is to find a project that you can relate to. If you aren’t feeling 100% comfortable with a certain type of deal, then don’t invest in that type of project. Stick to projects that you are familiar with, and feel safe with.

5. Be Aware Of Capitalization Rates

You will almost certainly make money over the long term when you invest in real estate, but you also need to consider the long-term value of the properties you are buying and the capitalization rate of return that is expected from your real estate investments. While flipping real estate, you will most likely be purchasing properties that are under renovation or have been abandoned.

These types of properties are at risk of being taken advantage of, so it is important to understand the capitalization rate of return that is expected from these types of investments. The capitalization rate of return is the percentage that you are expected to pay back on your investment. In many cases, the property will appreciate in value over time. In other cases, the property may decline in value, in which case you will need to pay back your capitalization rate of return.

This is very difficult to predict, so it is important to understand the capitalization rate of return that is expected from your real estate investments. There is no way to tell whether a project will appreciate in value or not, so it is important to understand what you are getting yourself in for. You can find out more about real estate capitalization rates in this article.

Conclusion

A passive income is defined as the income that you receive regularly which involves little effort on your own part. That is, while some other persons do the herculean part of the job, your own involvement does not really count but you get a huge part of the gain at the end of the whole process. You are certain of the inflow of money on a regular basis, but you don’t participate in the running of the business.

So, passive real estate income is the income you get regularly from real estate investment without playing an active role in the whole process. You get paid every month, quarter, or year but do not participate in the management or contribute work in the investment. Even though passive real estate investing is one of the most lucrative investments people can consider doing, the truth is that the investment requires a little bit of your attention in order to succeed as intended.

You have to be kept abreast of the activities of the firm you’ve invested your money in so as not to be jilted investor. However, if you are certain of the firm you are dealing with; you can always relax and attend the periodic meetings if there are any. Real estate is a great way to make money if you are willing to put in the effort.

There are many different types of real estate investing, and it is important to know which ones are best for you. If you are interested in real estate, then it is smart to get on the ground and do some research in order to make sure that you are getting good value for your money. There are many different types of real estate investing, and it is important to know which ones are best for you.

There are three main categories when it comes to real estate investing: fixed assets, discretionary, and real estate investment trusts. The capitalization rate of return is the percentage that you are expected to pay back on your investment. In many cases, the property will appreciate in value over time. In other cases, the property may decline in value, in which case you will need to pay back your capitalization rate of return.

This is very difficult to predict, so it is important to understand the capitalization rate of return that is expected from your real estate investments. There is no way to tell whether a project will appreciate in value or not, so it is important to understand what you are getting yourself in for.

The housing market is cooling throughout the country, including in New Orleans. Buyers are backing out because of the high-interest rates. When someone talks about New Orleans, the odds are equally good that it will conjure memories of Cajun food and Mardi Gras as Hurricane Katrina. The hurricane’s aftermath has come and gone, and while many left the city, the fact remains that New Orleans is still here.

New Orleans has a track record of being one of the best long-term real estate investments in

The housing market is cooling throughout the country, including in New Orleans. Buyers are backing out because of the high-interest rates. When someone talks about New Orleans, the odds are equally good that it will conjure memories of Cajun food and Mardi Gras as Hurricane Katrina. The hurricane’s aftermath has come and gone, and while many left the city, the fact remains that New Orleans is still here.

New Orleans has a track record of being one of the best long-term real estate investments in the U.S. While a large number of people fled New Orleans after Hurricane Katrina, the city remains home to roughly 390,000 people. It remains the largest city in Louisiana. However, the New Orleans housing market is larger than this.

The greater New Orleans area is home to around 1.2 million people. In 2021, the population of the New Orleans-Metairie metropolitan area in the United States was about 1.26 million people. This is consistent with the previous year when the population was around 1.27 million. (source: Statista)

If you factor in Metairie and Hammond, the metro area is home to roughly 1.5 million. New Orleans' appreciation rate over the last twelve months has been 10.78 percent, according to NeighborhoodScout data. In comparison to the rest of Louisiana, their data indicates that New Orleans' annual appreciation rate is greater than 50% of the state's other cities and towns.

New Orleans Housing Market Trends & Forecasts

New Orleans is a Louisiana city on the Mississippi River, near the Gulf of Mexico. The city of New Orleans and Orleans parish (county) are coextensive, occupying a point at the head of the Mississippi River delta at the Gulf of Mexico. According to Realtor.com, Orleans County, LA is a buyer's market, which means that the supply of homes is greater than the demand for homes.

New Orleans Housing Market Statistics

As per the real estate company named Redfin, in August 2022, New Orleans home prices were down 5.2% compared to last year, selling for a median price of $341K. On average, homes in New Orleans sell after 30 days on the market compared to 27 days last year. There were 355 homes sold in August this year, down from 392 last year.

New Orleans Real Estate Market Forecast 2023

The New Orleans housing market forecast for the 1-year ending with the 4th quarter of 2022 is positive. If this housing market forecast is correct, home values will be higher in the 4th quarter of 2022 than they were in the 4th quarter of 2021. According to NeighborhoodScout data, home appreciation rates in New Orleans have been above average for the last decade. Over the last decade, the cumulative appreciation rate has been 71.67 percent, placing it in the top 50% nationally. This equates to an annual average appreciation rate of 5.55 percent for New Orleans homes.

The typical home value in New Orleans is $287,794 on Zillow. New Orleans home values have gone up 9.2% over the past year. The typical home value of homes in the New Orleans-Metairie Metro is $254,376. New Orleans-Metairie Metro home values have gone up 9.2% over the past year and Zillow predicts they drop 1% between Aug 2022 to Aug 2023.

New Orleans Real Estate Investment Overview

If you are looking at buying a house in New Orleans as a potential investment opportunity, you must read it till the end. Investing in real estate is touted as a great way to become wealthy. Is New Orleans rental property good for investment? Planning to invest in the New Orleans real estate market? Many real estate investors have asked themselves if buying a property in New Orleans is a good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead.

As per the data from the real estate company called Neigborhoodscout.com, with a population of 383,997, 153,819 houses or apartments, and a median home price of $305,670, New Orleans real estate is some of the most expensive in Louisiana, though New Orleans home values are not among the most expensive in the United States. Single-family detached homes are the single most common housing type in New Orleans, accounting for 44.71% of the city's housing units.

Other types of housing that are prevalent in New Orleans include duplexes, homes converted to apartments or other small apartment buildings ( 25.77%), large apartment complexes or high-rise apartments ( 19.63%), and a few row houses and other attached homes (9.35%). People in New Orleans primarily live in small single-family detached homes. We have already discussed the New Orleans housing market forecast for answers on why to put resources into this sizzling market. Home prices in New Orleans have been trending up 3.7% year-over-year. Here are some of the best reasons to invest in New Orleans real estate.

The Diverse Economy

New Orleans has much more than tourism to fuel its economy. It is a major port. It is the commercial and economic hub for the Gulf Coast, the home to hospitals and schools. The Gulf of Mexico oil and gas industry has a strong presence there. Tourism, though, is a major contributor to the local economy. Tourism accounts for about two-fifths of their tax revenues.

The Sheer Demand for Rental Properties

New Orleans has a mixture of owner-occupied and renter-occupied housing. One of the lasting effects of Hurricane Katrina was the destruction of affordable properties in the New Orleans real estate market because they sat in the flood plain. Many who owned their homes had to move because rebuilding in below-sea-level areas was not permitted. Some left the area altogether, though others returned within a year and Hispanic immigrants working in the tourism industry have filled in the gap. This has resulted in high demand for New Orleans rental properties.

The military and government contractors also contribute to the demand for New Orleans rental properties. For example, the Navy’s SPAWAR Systems Command is located in Gentilly. There is a Naval Air Station Joint Reserve Base in New Orleans. The marine force federal reserves are in nearby Algiers. Then there is NASA’s rocket manufacturing facility in New Orleans run by Lockheed Martin. Note that Louisiana offers more protection for military tenants than average, such as letting them terminate the lease without penalty if government-supplied quarters become available or if they’re ordered to move into the barracks.

New Orleans has been one of the largest cities in the United States and the largest in the region for literally 200 years. It is home to Tulane University, Loyola University New Orleans, the University of New Orleans, Xavier University of Louisiana, Southern University at New Orleans, Dillard University, the University of Holy Cross, the Notre Dame Seminary, New Orleans Baptist Theological Seminary, Herzing College and several smaller schools. This means you can own multiple New Orleans rental properties, each catering to a different school. You can essentially diversify your portfolio while catering to college students.

The Short-Term Rental Opportunity

New Orleans had almost 18 million people visit in 2017. This creates significant demand for hotel space, though many choose to stay in New Orleans rental properties instead. What matters to investors considering the New Orleans real estate market is the fact that the city passed laws legalizing and regulating short-term rentals. You do have to secure a city license, go through inspections, and meet zoning restrictions. However, this is far better than the cities that have made it almost impossible to buy the property and turn it into short-term rental properties.

Airbnb was legalized in the New Orleans real estate market in 2016 and it's been growing quite well since then. Therefore, you can choose to invest in Airbnb rentals in New Orleans and earn a steady rental income. The upfront cost of running an Airbnb business is not much as you do not need to own a rental property. However, if you want, you can buy a property in New Orleans for an Airbnb investment. Unlike big cities like New York, the regulations on short-term rentals in New Orleans are not very tight, though there is some criticism from opponents about the leniency of these laws.

The Economics Driving Demand for Rentals

There are a number of factors driving demand for rentals in the New Orleans real estate market. The destruction of a fraction of the New Orleans housing market made the value of everything livable much higher. The flight of many residents did not hurt real estate prices much, because it paralleled the decreased number of homes. Rebuilding has occurred, with many new properties built in the suburbs away from the water. The influx of Hispanics and local kids coming for college and staying to work prevented wages from skyrocketing. In fact, they have stagnated. This keeps many people renting who would otherwise buy homes in the New Orleans housing market. This is why rents hit almost a thousand dollars a month in 2017.

The Landlord-Friendly Jurisdiction

If you are considering buying New Orleans rental properties, one of the next questions is how landlord-friendly the jurisdiction is. High return on investment only happens if tenants pay the rent, and that depends on the ability to quickly evict those who do not pay. If you have to go through a long, expensive legal process to kick out someone who sells drugs, intentionally damages the property, or disrupts the neighborhood, you do not want to invest there.

Fortunately, owners of New Orleans rental properties have the law on their side. The South in general is landlord-friendly, though individual cities can toughen up their laws to favor tenants. New Orleans has gone the other way, protecting landlords. Note that Louisiana’s French flavor means that the state has a number of legal quirks, so always work with an attorney to draft a lease agreement.

The Affordable Real Estate

The typical home price in the New Orleans housing market is 350K dollars. That alone makes it affordable compared to other large cities. One of the unique features of New Orleans is how many older homes it has. This does not just create a distinct architectural look and cultural atmosphere. It means that there are many older homes for sale. For example, in Orleans Parish, roughly two-fifths of all homes were built before the 1950s. These homes may be harder to maintain, but they also tend to be affordable and in walkable communities that newer residents desire. It also opens the door to investors buying homes in dire need of repair at a discount, fixing it, and then renting it out.

The Impact of Geography

One of the biggest factors in the New Orleans real estate market is geography. The city was built as a port because it sits on the mouth of the Mississippi River where it meets the Gulf of Mexico. On top of this are myriad lakes, sinking mud islands, and other uncertain ground where you cannot build. This means that a large part of the metro area is off-limits to development.

They simply cannot expand the housing market in New Orleans in several directions. Then there are the protected wetlands near city that you cannot build on. Geography literally constrains growth in the New Orleans housing market, and laws to protect the character of the city limit the ability to build skyscrapers and other high-density development. This protects the value of homes in the New Orleans real estate market.

Here are some of the best neighborhoods in New Orleans to invest in real estate because they have the highest real estate appreciation rates since 2000 (List by Neigborhoodscout.com).

Conclusion

Maybe you have done a bit of real estate investing in New Orleans, LA but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. If you are a home buyer or real estate investor, New Orleans real estate investment definitely has a track record of generating one of the best long-term returns in the U.S. through the last ten years. If you invest wisely in New Orleans real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it is very important to read good books on real estate.

Most investors naturally gravitate to residential property investment. When looking for the best real estate investments, you should focus on markets with relatively high population and employment growth. Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.

You must also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like New Orleans, LA. New Orleans offers a good combination of short-term renters like students and tourists and a permanent population of renters who cannot afford to buy homes. Geography and market forces limit housing supply, keeping home values and rents stable.

Buying an investment property is different from buying an owner-occupied home. Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor in New Orleans, LA is your ability to find great real estate investments in that area.

According to real estate experts, buying in a market with increasing prices, low interest, and low availability requires a different approach than buying in a cooler market. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.

Let us know which real estate markets you consider best for real estate investing! 

Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

References

Market Data, Trends and Statistics https://www.zillow.com/neworleans-la/home-values https://www.neighborhoodscout.com/la/new-orleans/real-estate https://www.redfin.com/city/14233/LA/New-Orleans/housing-market https://www.realtor.com/realestateandhomes-search/New-Orleans_LA/overview

Military Market https://en.wikipedia.org/wiki/New_Orleans#Business https://www.avail.co/education/laws/louisiana-landlord-tenant-law

Landlord friendly https://www.theadvocate.com/gambit/new_orleans/news/article_ea6cfdac-fc09-5dae-8480-4768a93ab6b5.html

Demand for rentals https://www.theadvocate.com/gambit/new_orleans/news/article_ea6cfdac-fc09-5dae-8480-4768a93ab6b5.html https://www.bigeasymagazine.com/2019/02/11/pushed-out-the-changing-demographics-of-new-orleans

Short term rentals https://www.mashvisor.com/blog/new-orleans-real-estate-market-airbnb

Affordable real estate https://www.bigeasymagazine.com/2019/02/11/pushed-out-the-changing-demographics-of-new-orleans

Where Are Housing Prices Falling 2022: When Recession Hits

Redfin revealed its “risk score” on Friday, which identifies the home markets that are most vulnerable to a “housing slump.” The greater a market's “risk score,” the more likely it is that house prices will fall year over year.  Redfin examined 98 regional housing markets and evaluated indicators such as home-price volatility, average debt-to-income ratio, and home-price growth. Among the 98 markets measured

Where Are Housing Prices Falling 2022: When Recession Hits

Redfin revealed its “risk score” on Friday, which identifies the home markets that are most vulnerable to a “housing slump.” The greater a market's “risk score,” the more likely it is that house prices will fall year over year.  Redfin examined 98 regional housing markets and evaluated indicators such as home-price volatility, average debt-to-income ratio, and home-price growth. Among the 98 markets measured by Redfin, Riverside had the highest likelihood of seeing a “housing downturn.”

It was followed by Boise, Cape Coral, North Port, Las Vegas, Sacramento, Bakersfield, Phoenix, Tampa, and Tucson. Popular migration destinations where home prices soared during the pandemic, such as Boise, Phoenix, and Tampa, are most likely to see the effects of a housing downturn amplified and year-over-year home prices decline if the economy enters a recession, a scenario that some economists believe is likely as inflation persists and stock markets stumble.

Homeowners in those markets who are considering selling should market their properties as soon as possible to avoid price drops. Rust Belt cities like Cleveland and Buffalo, which are still inexpensive, are the most resilient to a housing market crash. The U.S. housing market slowed significantly in the spring due to rising mortgage rates. Redfin studied which metros are most vulnerable to home-price reductions if the country enters a recession and which are most immune to an economic slump.

Recession-proof northern metros, including Cleveland and Buffalo, NY, are relatively inexpensive. Prospective homebuyers in these places can proceed with confidence. Redfin's examination of 98 U.S. metros with relevant data utilizes home-price volatility, average debt-to-income ratio, and home-price growth. Each metro is given an overall risk score relative to the others. 100 indicates the highest possibility of a housing market slump, including home-price decreases, while 0 indicates the lowest.

“Recession fears are escalating, mostly because the Fed has signaled it will continue to raise interest rates to tame inflation and cool consumer demand. Higher interest rates led to surging mortgage rates, which have already cooled down the housing market,” said Redfin Senior Economist Sheharyar Bokhari. “If the U.S. does enter a recession, we’re unlikely to see a housing-market crash like in the Great Recession because the factors affecting the economy are different: Most homeowners have a fair amount of home equity and not much debt and unemployment is low.”

Housing Markets at Risk of Falling Home Prices

If the U.S. enters a recession, Riverside's home market will chill the most. It has the highest danger score of any major U.S. city, 84. It's more likely than other metros to see prices drop year over year during a recession or economic slowdown, according to housing and economic statistics. Riverside, which includes San Bernardino, Ontario, and Palm Springs, has variable house values and was a favorite location during the epidemic for both permanent movers and second-home buyers.

Riverside is followed by Boise (76.9), Cape Coral, FL (76.7), North Port, FL (75), and Las Vegas (74.2).

Sacramento, CA (73.1), Bakersfield, CA (72.2), Phoenix (72), Tampa, FL (70.7), and Tucson, AZ (70.1) round out the top 10.

Many of these housing markets, like Riverside, are popular migration destinations or have quickly growing property prices, both of which increase their likelihood of a housing slump. Boise, Cape Coral, North Port, Las Vegas, Sacramento, and Phoenix were among the 20 fastest-cooling areas in May when mortgage rates reached 5.5%. As the economy continues to decline, prices may fall in many of these metros. Six of the 10 areas most at risk of downturns are among the most popular destinations for Redfin.com users moving from one metro to another.

Maricopa County (Phoenix) and Riverside County gained more residents from other parts of the U.S. than anywhere else in 2021, according to the U.S. Census. The most vulnerable metros have likewise seen an outsized price rise. North Port has the nation's fastest-growing house values, up 30.5 percent year over year in May, followed by Tampa (28.1 percent) and Las Vegas (26.8 percent ). Overall, nine of the ten most vulnerable locations had faster-growing house values than the national median (the exception is Sacramento, however, home prices there rose more than 40% throughout the pandemic, reaching $610,000 in May 2022).

Several of those metros went from inexpensive to unaffordable during the epidemic, owing in part to the migration of individuals from other locations. Among them is Boise, where the typical home price increased from $330,000 to $550,000 between May 2020 and May 2022, and Phoenix, where it increased from $300,000 to $485,000.

“Boise’s market is already turning around, as a lot of the people who moved to Idaho during the pandemic are either moving back to their hometowns or cashing in and moving to more affordable places. The housing market was hot during the pandemic, largely because of out-of-town buyers,” said Boise Redfin agent Shauna Pendleton.

Three at-risk metros are in California and three in Florida. San Jose, Oakland, and San Francisco experienced relatively moderate price increases throughout the epidemic, its people tend to have high salaries and considerable home equity, and their housing markets started falling fast in the first half of 2022, mainly owing to collapsing tech stocks. Not all homes in these metros will lose value. Large single-family houses in spread-out areas are recession-proof.

Housing Markets in Which Prices Are Unlikely to Fall

Relatively affordable Rust Belt metros are most resilient in the face of a recession. In case of a recession, Akron, Ohio has the lowest risk of experiencing a housing decline. It has the lowest total risk score of any major US city at 29.6. Low home-price volatility, a low debt-to-income ratio, a small number of second houses, and the fact that properties in Akron are unlikely to be flipped are some of the characteristics that make the city relatively stable.

With an overall risk score of 30.4, Akron is followed by Philadelphia, Montgomery County, PA (31.4), El Paso, TX (32.2), and Cleveland (32.4). The top ten include Cincinnati (32.6), Boston (32.6), Buffalo, NY (33.1), Kansas City, MO (33.4), and Rochester, NY (34.4). Almost all of those metros are inexpensive and have relatively slow-increasing prices, both of which would benefit their housing markets in the event of a recession.

Almost all of the most resilient metros are located in the northern United States, either in the Rust Belt or on the East Coast. Three of them are in Ohio, two in New York, and two in Pennsylvania. In nine of the ten most resilient metros, prices climbed at a slower rate than the national average (El Paso is the exception).

Seven of the 10 metros least in danger of a housing downturn had a median sale price below $300,000 in May, and nine of them were below the $431,000 national median. Affordability benefits property markets in a recession because more people can buy houses, and such locations may attract out-of-town buyers. Boston is pricey, although property prices climbed modestly throughout the epidemic. It's busy and lost residents as remote work became prevalent.

U.S. Metros Most and Least Susceptible to a Housing Downturn in the Next Recession

Ranked by highest to the lowest chance of a housing downturn. The ranking combines 10 indicators to come up with an overall risk score for each metro, relative to the other metros in this analysis. The highest possible score is 100 and the lowest possible score is 0. The indicators are as follows: home price volatility, average debt-to-income ratio, average home-loan-to-value ratio, labor market shock, percent of homes flipped, how much the housing market is “cooling” compared with other metros, the year-over-year change in domestic migration, the share of homes in the metro that are second homes, year-over-year price growth and elasticity of supply. Each factor is weighted equally.

Source: https://www.redfin.com/news/metros-recession-risk-housing-downturn-2022/

Forecast: How High Will Mortgage Rates Go in 2022

Mortgage rates have risen since the start of 2022, reflecting investors' concerns that the economy is heating up and that the Fed will cool it down and reign in inflation. U.S. Treasury bond rates, which mortgage rates follow, encountered two tough patches this year: in late February, when Russia invaded Ukraine, and in mid-May when investors worried about poor consumer spending. Bond yields and mortgage rates declined throughout

Forecast: How High Will Mortgage Rates Go in 2022

Mortgage rates have risen since the start of 2022, reflecting investors' concerns that the economy is heating up and that the Fed will cool it down and reign in inflation. U.S. Treasury bond rates, which mortgage rates follow, encountered two tough patches this year: in late February, when Russia invaded Ukraine, and in mid-May when investors worried about poor consumer spending. Bond yields and mortgage rates declined throughout these times.

Most mortgage-market analysts predict rates will be choppy over the next few months but will settle above where they are now—with the 30-year fixed-rate mortgage just around 5 percent—for the next year or two. The Fed raised interest rates by 75 points on Wednesday, but analysts say the impact on the mortgage market has already been felt. When the Fed announced a rate hike, the average 30-year fixed mortgage rate dropped sharply. According to a Bankrate poll, the average 30-year fixed rate was 5.59 percent, 17 points lower than last week.

After a turbulent June and early July, rates fell. July inflation was 9.1%, more than forecast. In response, the Fed shifted from contemplating a 50-basis-point boost to a bigger 75-point hike to confront increasing inflation. Freddie Mac's 30-year fixed rate fell 24 points to 5.3% in a comparable poll. According to the Federal Reserve, inflation remains high due to pandemic-related supply and demand imbalances, increased food and energy costs, and broader price pressures.

The Fed's policies affect lenders' cost of money, not mortgage rates. Most lenders have factored in inflation-related cost hikes. Since December, costs have paralleled Fed moves. Mortgage rates sometimes rise before predicted lender cost rises to minimize sticker shock. Therefore, volatility in mortgage rates is expected. The recent Fed rate rise affects your finances. It will undoubtedly raise credit cards, home equity, and line of credit interest rates (HELOCs).

Rate rises generate increased rates on high-yield savings accounts and other savings instruments. Experts say the recent Fed rate hike shouldn't prompt homebuyers to hesitate or change their plans. Rate and conditions vary on a borrower's credit, loan type, and mortgage lender. ARMs and HELOCs are likewise related to the prime rate, but 15- and 30-year mortgage rates are fixed and tied to Treasury yields and the economy. Rates have practically doubled since the start of the year, reducing buyers' purchasing power.

In a few months, consumers will feel the Fed's rate hike. In one to two billing cycles, credit card and vehicle loan rates will certainly rise. Those with adjustable-rate mortgages or who want to get one soon should expect higher rates. Many Americans with variable-rate private student loans might see interest rates hike next month. Home prices, rentals, and inflation are all at historic highs. A recession is imminent, and more corporations are declaring layoffs to stave off a consumer spending slump.

People are contemplating big-ticket purchases because of employment uncertainties. Higher borrowing rates have impacted real estate demand. New and existing house sales declined in the first half of the year, while contract signings dropped sharply in the summer. As a result, many house sellers are seeing their properties linger on the market longer. Price cuts are a go-to for sellers. As fall and winter approach, we may anticipate home markets to rebalance and pick up speed.

Will Mortgage Rates Go Down in 2022?

Mortgage experts are divided over where rates are headed in the coming week (July 28-August 3). In response to Bankrate's weekly poll, 50 percent say rates are going up, and 50 percent say rates are going down. Slowing economic growth and Fed rate hike fears will drop bond yields and mortgage rates. Freddie Mac reports that the average 30-year fixed mortgage rate rose 248 basis points from Jan. 6 to June 30, 2022.

Current Mortgage Interest Rates (Source: Bankrate.com)

The Fed raised rates in June to battle inflation. The next day, mortgage rates jumped 55 basis points (0.55%) week-over-week, the most since 1987. With the pandemic's waning influence, inflation at 40-year highs, and the Fed predicting four more rises, interest rates might rise this year. An imminent recession has produced rate decreases and might cause more any week. Freddie Mac, the MBA, and other industry heavyweights disagree on whether 30-year mortgage rates will rise or level out in August 2022.

Experts are forecasting that the 30-year, fixed-rate mortgage will vary from just above 5% to as high as 7% by the end of 2022. Here are their more detailed mortgage interest rate predictions for 2022.

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