There are a lot of opinions about the future of the real estate market so we thought it might be fun to square off two different personal finance bloggers and let them try to convince you whether to invest or not.
Up first is our list of reasons why you should start investing in real estate right now and next week we’ll share a few reasons why you should hold off. I hope you enjoy…
1. Low Prices
Real estate prices are the lowest that they have been in decades all across the country. Many of the most attractive states to live in like Florida, California, and Nevada have seen the prices of homes decline by more than 40%.
This may be bad news for existing homeowners, but it is great news for anyone in the real estate market. The low prices enable you to get a lot more home for your money.
2. Low Interest Rates
Another benefit of investing in real estate right now is that interest rates are at an all time low. Home shoppers can purchase a residence or investment property for around 4% annually. A rate that low is not likely to be seen for a very long time.
It makes sense to get a 30 or 40 year fixed rate mortgage when interest rates are as low as they are today because even a 1% difference in rates could mean the difference of thousands of dollars (use an emortgagecalculator to see exactly how much you’ll save).
3. Low Risk
The biggest risk of investing in any market is that you will buy at the peak of a bubble and wind up losing a lot of money. Since housing prices have tumbled, the risk is basically gone from the real estate market. Buying real estate right now is a smart long term investment because you are getting in on the ground floor.
Real estate prices may not recover for a year or two, but it is highly likely that prices will be much higher over the next decade. You don’t want to miss out on an opportunity to make money.
4. Low Tax Liabilities
The federal government is talking about closing up many of the tax loopholes, but one major deduction that seems to have staying power in the home mortgage interest deduction.
This deductions could substantially lower the amount of taxable income that you have and reduce your federal income tax liability.
Stay tuned next week for our follow-up….