Norada Real Estate Investments

How To Retire Early With Real Estate?

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How To Retire Early With Real Estate?

So, how does it feel to Retire Early with Real Estate? When you talk about retiring early with real estate, the default answer for many is, “I’ll pay off the house.” A common second answer is, “I can borrow against my home equity if I need the money.” The best answer would be, “That’s how I pay for my early retirement.” Real estate is often viewed as an effective way to hedge against market volatility. The best way to retire early with real estate is by investing in rental properties as they generate passive income.

The short answer is: yes, real estate is a good investment for retirement if done right. Too many people think that you cannot retire early with real estate because it requires becoming a handyman. In reality, you can outsource that work to a property management company, generally for 10% of the rent collected on the rental property. This means you could buy five to fifteen rental homes and have someone else do the bulk of the work. If you invest in apartment buildings, commercial real estate, or other projects, you are even more removed from the day-to-day operations of the property.

<<<Also Read: Housing Market Predictions>>>

The wrong answer to this question is to start buying properties to rehab and hope that you can sell them at a profit. Yes, house-flipping shows are popular. No, it is not a good way for retirees to invest in real estate. You risk losing a large portion of your nest egg if the property takes longer to sell than expected or if the rehab costs of the property are far higher than expected.

For skilled contractors, this may be a viable real estate investing strategy, but they risk owning their job because they only clear as much money per flip as they’d earn working for others. In summary, house flipping is not a viable method for most to retire early with real estate. When you choose to invest in real estate for your retirement or otherwise, don’t buy properties in an area where people are moving out. Yes, the properties are cheap.

No, you won’t earn much in rent and your ability to sell the property if you want to get out is declining. Be careful of buying rental properties in markets going up, since the property in a good school district may be desirable but the rents you could get are not as high as a percentage of the property’s value. After all, if the rent is too high, they may find it cheaper to simply buy the house next door. Do buy properties to rent that you can sell as required, since those who retire early with real estate may need to sell the property to pay major medical bills or for long-term care.

Can You Retire Early With Real Estate?

retire early with real estate

Before we answer this question, let’s compare real estate to some alternative forms of investments that can be included in your early retirement strategy. Government bonds are theoretically the safest investments around, but they’ve often failed to pay interest rates above the inflation rate. Savings accounts are hardly better. Corporate bonds pay slightly better, but they are hard to find. The higher the interest rate, the greater the risk the business will go under. Nor can you assume that your corporate bonds will pay back your principle.

During the Obama administration, the federal government overturned years of established precedence and said the unions get their money ahead of bondholders, most of whom were retirees.

Stocks that pay dividends were considered a gold standard, but the sheer volume of money pouring into the market via tax-advantaged retirement accounts has driven up their cost relative to the dividends they may or may not pay. You cannot plan a retirement budget off of praying for capital gains. A viable rental income retirement strategy balances income with security.

And this brings us back to the question, “can you retire early with real estate?” Yes, you can retire early with real estate by owning a portfolio of rental properties. The rental real estate retains its value as long as you vet tenants, supervise the properties and maintain proper insurance. It generates cash flow every month the tenants pay, and you can ensure this by vetting tenants and evicting those that don’t pay rent. The return on investment for rental income is in the 5% to 10% range, depending on the type of investment. It is difficult to find those rates of return without far greater risk than rental real estate. This is why it is a good idea if you choose to retire early with real estate than go out for risky investments.

How Investing in Real Estate Can Boost Your Retirement Income?

Yes, you can retire early with a passive real estate income if you do it right. You can follow these successful real estate investment strategies to boost your retirement income.

Investing In REITs For Early Retirement

While owning real estate can be lucrative, it's not necessarily the most feasible option for every investor. Acting as a landlord for some can be both costly and overwhelming. Investing in a real estate investment trust is considered a sound way to secure your retirement.

REITs by comparison, offer many of the same benefits associated with direct property ownership without the hands-on management responsibilities. In this retirement strategy, you're buying shares in REITs or real estate investment trusts. You’re buying shares of a corporation that builds apartment buildings, commercial real estate, or other types of property. They are required by law to pay out 90% of their taxable income as dividends to shareholders. You receive regular income from them, though it may only be paid out annually.

The main benefits of this approach towards securing your retirement are liquidity since you can sell the shares, and the ability to diversify since you can buy shares in medical property developers and apartment builders. Many real estate-related investments have done quite well in the last decade or so. The median sales price of single-family homes hit $315,700 at the end of the third quarter, up 23 percent from the prior peak for values in 2007 before the financial crisis hit.

Compare this to the risk of putting all of your money into a single commercial building or several single-family rental homes. A better way to assess REITs is to look at their funds from operations or FFO. Whereas reported earnings treat depreciation on real estate holdings as an expense that lowers results, FFO adds depreciation back, which more accurately reflects the value of a trust’s property. As you're planning your early retirement strategy for 2019 and beyond, it's important to ask yourself whether a real estate investment trust belongs in your portfolio.

According to Scott Crowe, chief investment strategist at CenterSquare Investment Management, “REITs offer significant advantages to investors who are seeking access to real estate relative to direct property ownership, including much lower asset management costs, improved liquidity in terms of geographic and property sector exposure and greater transparency.”

Rental Income Retirement Strategy

A second viable strategy is retirement through rental income. There are many ways to make passive income in real estate. One of them is direct income from rentals. A rental income retirement strategy is the best option for retiring early with real estate. Once the income surpasses the expenditures, then you are on the winning side. In this strategy, you'd be buying detached single-family homes to rent out. You receive a higher rate of return on these properties than duplexes or triplexes. The properties are easier to sell if you want to get out of them.

We recommend single-family homes over owning condos because condo homeowner association rules could limit how the property is used – including as a rental unit. Another issue is the boom and bust cycle of condos. While you could find a condo at a deep discount during a bust, the lower limit of rent you could charge is set by the surrounding apartments. If you buy at the peak, your return on the investment is lower while the rent you charge is still determined by what surrounding apartments go for. The only potential benefits to condos are the elimination of yard work and the occasional ability to get a bulk discount for buying several properties.

While you can replace your income with a good rental income retirement strategy, you will have to pay the bills either upfront or over the long term. Don’t delay paying for that new roof and have to gut the house to fix the rotting walls. Don’t ignore pest control and have to pay for termite treatment of the property. Don’t skip the process of vetting tenants and end up paying for the damage they cause. Shortcuts will cost you dearly.

These issues arise even if you’re buying condos instead of single-family homes. If you don’t want to do the work or hire someone else to do it, consider investing as a partner in an apartment complex or buying REIT shares instead. Remember, to retire early with real estate, you must choose a property that is “turnkey” and “rent ready.” A good rental property is fully refurbished or a new construction residential property. The property must be in growth markets and must produce a positive cash flow. The property must have a good appreciation potential.

Norada Real Estate Investments can help you retire early with real estate investing. By researching top real estate growth markets and structuring complete turnkey real estate investments, they help you succeed by minimizing risk and maximizing profitability. For below-market value rental properties for sale (Click on the hyperlink).

How Many Rental Properties Do You Need To Retire Early?

The answer to this question depends on how much money you need to retire early on. If each property clears $300 a month, then you need 10 filled properties to replace a $3000 a month income. If you need $6000 a month in income, then you’d need to rent out 20 single-family homes.

According to a recent study, single-family homes in large U.S. cities have generated returns of about 9% annually between 1986 and 2014. Half of that gain was rental income, and half of it was in capital appreciation. This means that rental real estate yielded an average 5% ROI each year after expenses like insurance, property taxes, and maintenance. Those who chose to sell a home gain about 5% per year of capital gains. Average rents were about 10% of the value of the property, but 40% or more went to pay bills like the mortgage, insurance, taxes, and maintenance.

This suggests that if you invest $100,000 into one or two single-family rentals, you’d reap about $5000 a year in rental income. However, that figure is based on purchasing the property outright. In reality, since those figures assume you’re carrying at least a partial mortgage on each property paid in part by the tenant’s rent, you could invest $100,000 into two large single-family homes or four smaller ones worth around $200,000 and reap $10,000 or so in rental income per year.

The more money you put down on a property, the more you clear each month. At the other end of the spectrum, if you put 10% down on each property, you may only clear $300 a month in passive income and need ten homes to generate that $3000 a month income stream. If you can buy the properties outright, you could clear $700-$1000 a month – and in the last case, you only need three single-family homes to pay your bills. Note that the rental income retirement strategy will depend in part on the level of debt you take on and the interest rates you pay on the debt, so run the numbers before you buy a rental property.

This means that your rental income retirement strategy depends on several factors. How much income do you need to pay your bills? And how much risk are you willing to take in the form of debt? Greater debt levels could yield many properties that end up paying your bills, but if you don’t manage costs and make sure the rent is paid, it can all collapse on you.

Conversely, you have significant upside potential if you can live on less than the generated cash flow and start paying down the mortgages. Once a house is paid off, you clear far more income from it each month without additional expenses. If you have a small portfolio and aggressively pay down the debt, you have an inflation-proof way to retire early with real estate since your income will automatically go up with time.

If you are a beginner in rental property investing, it is very important to read good real estate books. You must also learn from successful real estate investors who have retired early on in their lives by investing in some of the best real estate markets like the Dallas Housing Market. Dallas housing market is a great market because it has a strong economy and a constant population growth which will make your pockets bigger. As rents go up smart investors should invest in Dallas for their early retirement.

Another great market for investing for your early retirement is the Houston Housing Market. The Houston Real Estate Market is becoming a hotbed of buyer activity that could be beneficial for real estate investors; just ask the multitude of overseas investors who are choosing Houston as the city of choice to invest in for the foreseeable future.

We also recommend these hottest real estate markets for investors looking to build their portfolio of single-family rental homes for their early retirement. The single-family market is particularly hot right now. Following the housing market decline in 2007, single-family rental properties became favorable options for investors, saving on construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate.

Almost all the housing demand in the US in recent years has been filled by single-family rental units. Between 2019 and 2020, the number of built-to-rent residences – single-family homes designed specifically for rental purposes — grew by 30%. They currently account for around 6% of all new homes built in the United States, a figure that is expected to grow in the next decade. Rent growth is strong in every price tier, but strongest at the very top and some markets are hotter than others.

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.

References

Condo restrictions
https://www.nolo.com/legal-encyclopedia/which-better-return-investment-condos-single-family-homes.html

ROI of single-family homes
https://www.usatoday.com/story/money/personalfinance/columnist/2018/05/24/real-estate-heres-how-much-you-can-expect-earn-landlord/618206002/

Property management
https://www.marketwatch.com/story/5-things-to-know-about-investing-in-single-family-rental-homes-2018-05-29

40% of rent goes to expenses, not including mortgage
https://www.forbes.com/sites/erincarlyle/2016/03/31/the-best-markets-for-investing-in-single-family-homes-right-now/#77eed9184496

REITs
https://money.usnews.com/investing/articles/2017-02-21/are-reits-right-for-your-retirement-portfolio

Tacoma Housing Market: Prices | Trends | Forecast 2023

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Tacoma Housing Market Trends for 2023

The Tacoma housing market is experiencing a few changes in 2023. In this blog post, we will be looking at the recent reports discussing the current trends in the Tacoma housing market. The following housing market trends are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded.

Median Listing Home Price

The median listing home price in Tacoma, WA was $450K in January 2023, trending down -3.2% year-over-year. This means that the median home price in Tacoma has decreased compared to the same period last year. The median listing home price per square foot was $295, which is a good indicator of the current housing market trends in Tacoma.

Median Listing Home Price vs. Median Home Sold Price

When we look at the median listing home price compared to the median home sold price, we can see that homes are selling for slightly less than their listed price. According to the report, the median home sold price in Tacoma was $430K, which is lower than the median listing home price of $450K. However, the sale-to-list price ratio is 100%, which means that homes in Tacoma are selling for approximately the asking price on average in January 2023.

Sale-to-List Price Ratio

As mentioned earlier, the sale-to-list price ratio is an important metric to understand the current housing market trends. A sale-to-list price ratio of 100% indicates that homes are selling for the asking price, while anything above 100% indicates that homes are selling for more than the asking price. On the other hand, a ratio below 100% indicates that homes are selling for less than the asking price. In January 2023, Tacoma, WA had a sale-to-list price ratio of 100%, indicating a balanced market.

Median Days on Market

Another important metric to consider when looking at the housing market trends is the median days on the market. The median days on the market in Tacoma, WA is 68 days, which means that on average, homes in Tacoma sell after 68 days on the market. It is interesting to note that the trend for median days on the market in Tacoma has gone up since last month and slightly up since last year.

Hence, we can see that the Tacoma housing market is experiencing a slight downward trend in the median listing home price. However, the sale-to-list price ratio indicates that homes are selling for the asking price, which is a good sign for the market. Additionally, the median days on the market are relatively stable, but it is increasing gradually. Overall, the Tacoma housing market is currently balanced, which means that the supply and demand of homes are about the same.

Tacoma Rent Prices 

As of February 26, 2023, the average rent for a 1-bedroom apartment in Tacoma, WA is currently $1,445. This is a 4% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Tacoma decreased by -9% to $1,283. The average rent for a 1-bedroom apartment increased by 3% to $1,445, and the average rent for a 2-bedroom apartment increased by 1% to $1,725.

  • The average rent for a 2-bedroom apartment in Tacoma, WA is currently $1,725. This is a 2% increase compared to the previous year.
  • The average rent for a 3-bedroom apartment in Tacoma, WA is currently $2,263. This is a 1% increase compared to the previous year.
  • The average rent for a 4-bedroom apartment in Tacoma, WA is currently $2,500. This is a 4% increase compared to the previous year.

Pierce County Housing Market Trends 2023

According to the February home sales report from the Northwest Multiple Listing Service, there was a significant increase in total active listings in January 2023 compared to the previous year. However, pending sales decreased by 5.75%, and closed sales decreased by 34.18%. Despite this, the median home price decreased slightly by 0.97%. The Pierce County market currently has 2.13 months of inventory, indicating a seller's market.

Based on the data presented, it appears that the Pierce County housing market has cooled off slightly since January 2022. While there were fewer active listings in January 2023 compared to the previous year, the median price for properties remained relatively stable, with only a slight decrease of 0.97%.

Buyers in the Pierce County market should expect to see a reduced number of available properties compared to last year, but may still encounter competition for desirable homes due to a low inventory of available listings. Additionally, the slight decrease in median price may present some opportunities for buyers to negotiate better deals. However, it's important to keep in mind that the market can shift quickly, so working with a knowledgeable real estate agent and staying up-to-date on market trends is essential for making informed buying decisions.

Tacoma Housing Market Forecast 2023

Tacoma Real Estate Market Forecast
Source: Zillow

The Tacoma housing market is one of the most promising in the United States. Tacoma is located in Washington state and is known for its natural beauty, vibrant downtown, and proximity to Seattle. In this blog post, we will look at the latest trends in the Tacoma housing market for January 2023 based on a recent report released by Zillow.

Average Home Value

According to the Zillow Home Value Index (ZHVI), the average home value in Tacoma is $457,096 as of January 31, 2023. This represents a 1.4% increase over the past year. This increase is a positive sign for homeowners in Tacoma, as it indicates that the housing market is stable and growing.

Market Overview

The median sale-to-list ratio in Tacoma as of December 31, 2022, was 1.000. This means that homes in Tacoma are selling for their asking price on average. Additionally, 35.2% of sales were over the list price, while 42.1% were under the list price. This suggests that the Tacoma housing market is competitive, and buyers may need to offer above the asking price to secure a home. The median days to pending in Tacoma as of January 31, 2023, was 26 days. This means that homes in Tacoma are selling quickly, and buyers need to act fast to secure a home.

Neighborhoods in Tacoma

Tacoma has many vibrant neighborhoods, each with its unique characteristics and housing market trends. Some of the popular neighborhoods in Tacoma include North End, South End, and Central Tacoma. The median ZHVI for these neighborhoods ranges from $355K to $511K.

The Tacoma housing market is stable and growing, with an average home value of $457,096 and a 1.4% increase over the past year. Buyers may need to act fast and offer above the asking price to secure a home in the competitive housing market. Working with a local real estate agent can provide valuable insights into the local housing market and help buyers navigate the home-buying process.

Metro Level Forecast 2023-2024

According to the ZHVI data, the average home value in the Seattle-Tacoma-Bellevue area is $689,866, which is up 2.9% over the past year. This indicates steady and sustained growth in the market. While the 1-year market forecast for the Tacoma housing market is -1.1%, this negative forecast should not deter buyers, as the market remains healthy and stable.

The median sale-to-list ratio for the Tacoma housing market as of December 31, 2022, is 0.993, indicating that homes are selling very close to their listed prices. This suggests that the market is currently balanced, with neither buyers nor sellers having a significant advantage. 53.7% of home sales in the Tacoma housing market as of December 31, 2022, were above the listed price, while 36% of home sales were below the listed price.

This indicates that there is still room for negotiation in the market, but the majority of sales are happening at or above the listed price. The median days to pending for the Tacoma housing market as of January 31, 2023, is 22.7%, indicating that homes are going under contract in just over three weeks. This suggests a competitive and active market, with buyers moving quickly to secure homes they are interested in.

The Tacoma housing market remains healthy and stable, with steady growth in home values and a balanced market. While the 1-year market forecast may be negative, this should not deter buyers, as the market is still competitive and active. With homes going under contract in just over three weeks and a majority of sales happening at or above the listed price, it's a good time for buyers and sellers alike to consider the Tacoma housing market.

Tacoma Real Estate Investment Overview

Tacoma, Washington, has emerged as a favorable destination for real estate investors due to its strong housing demand and sustained growth. As the state's third-largest city, Tacoma has a population of around 220,000, and it's growing at a rate of 0.78% annually. Furthermore, it is a satellite city located at the southern end of the Seattle metropolitan area, which is home to approximately a million people. The Tacoma housing market has remained resilient in recent years, and real estate investors have found favorable returns in the short term.

Top Reasons to Invest in Tacoma Real Estate:

  • Strong Demand: The demand for housing in Tacoma has consistently remained strong due to its growing population and proximity to the Seattle metropolitan area. Additionally, Tacoma is home to several prominent employers, including Joint Base Lewis-McChord, MultiCare Health System, and the Port of Tacoma. This demand is expected to continue to increase, making Tacoma an excellent destination for real estate investors.
  • Affordable Prices: Despite being a part of the Seattle metropolitan area, Tacoma offers more affordable housing options compared to Seattle. The median home value in Tacoma is around $457,000, while the median home value in Seattle is $831K. This affordability factor makes it an attractive destination for first-time homebuyers and real estate investors alike.
  • Positive Growth Outlook: According to the Zillow Home Value Index (ZHVI), Tacoma's average home value has steadily grown over the past year, indicating a positive growth outlook. Additionally, the Tacoma housing market is expected to continue growing in the coming years, making it a favorable destination for real estate investors.
  • Low Vacancy Rates: The vacancy rates in Tacoma are relatively low, indicating a stable and active housing market. This is good news for real estate investors looking to rent out their properties as they can expect a steady stream of rental income.
  • Diverse Housing Options: Tacoma offers a diverse range of housing options, from single-family homes to townhouses and condos. This diversity makes it easier for real estate investors to find a property that suits their investment goals.
  • Economic Growth: The economy in Tacoma has been growing steadily, with several new businesses and industries moving to the area. This economic growth is expected to continue in the coming years, which will likely further boost the demand for housing in Tacoma.

In conclusion, the Tacoma housing market offers a favorable destination for real estate investors due to its strong demand, affordability, positive growth outlook, low vacancy rates, diverse housing options, and economic growth. With these factors in mind, it's easy to see why Tacoma is becoming a popular destination for those looking to invest in real estate.

How Should Buyers Invest in This Market?

There is no one-size-fits-all answer to how buyers should invest in the Tacoma real estate market, as each buyer's situation is unique. However, there are some general tips that can help buyers make informed investment decisions:

  • Work with a local real estate agent: Working with a local agent who is familiar with the Tacoma market can be invaluable. They can provide insight into market trends, help buyers identify investment opportunities, and negotiate on behalf of their clients.
  • Conduct thorough research: Buyers should do their due diligence and research the Tacoma market before investing. This can include analyzing historical sales data, examining current market trends, and identifying areas with potential for growth.
  • Consider long-term investment goals: Real estate investing can be a long-term strategy, so buyers should consider their long-term investment goals. For example, if a buyer is interested in rental properties, they should consider factors such as rental rates, vacancy rates, and potential for future rental demand.
  • Have a solid financial plan: Investing in real estate can be expensive, so buyers should have a solid financial plan in place. This can include having a pre-approval for a mortgage, a solid down payment, and a plan for ongoing maintenance and repairs.
  • Diversify investments: Investing in real estate can be a great strategy, but it's important to diversify investments to minimize risk. Buyers should consider diversifying their investments across different types of real estate, geographic locations, and asset classes.

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 Tacoma, Washington 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.

The other best place in Washington to invest in real estate is Spokane. Spokane is a relatively cheap real estate market on the West Coast. It is already seeing increased demand and property valuations, while it remains a safe place to invest in real estate. Skip Seattle and Silicon Valley and invest in the future growth of Spokane. One reason why Spokane long lagged behind Seattle was its higher unemployment rate. Seattle has a roughly 3% unemployment rate, significantly lower than the 5% unemployment rate seen in Spokane. Spokane’s economy, though, is seeing a surge in higher-wage jobs.

Out of the tens of thousands of new jobs created since 2010, the majority of them pay more than the average county wage – which is in line with the national average. The promise of better pay will lure many people to Spokane to live, fueling demand for the Spokane real estate market. Another hot place in Washington to invest in real estate is none other than Seattle. Seattle is a pricey but sizzling market-making news all around the year. Seattle has long been second to Silicon Valley, but its strong economy, diverse population, and better regulatory climate are bringing refugees from California and migrants from around the country and world to live here.

Regardless of the area’s weather, the Seattle housing market’s outlook can only be described as sunny. Seattle has repeatedly hit lists as being among the top cities for real estate sellers to get the highest return on their investments. Property values have gone up consistently for years. Rental rates are high and continue to rise, guaranteeing ROI for those who buy and hold properties. This means you will certainly be able to profit from the large rental market in Seattle whether you buy and hold or buy and flip.

Let us know which real estate markets you consider best for real estate investing! If you need expert investment advice, you may fill-up the form given here. One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.

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

  • https://www.zillow.com/tacoma-wa/home-values
  • https://www.nwmls.com/
  • https://www.zumper.com/rent-research/tacoma-wa
  • https://www.redfin.com/city/17887/WA/Tacoma/housing-market
  • https://www.neighborhoodscout.com/wa/tacoma/real-estate
  • https://www.realtor.com/realestateandhomes-search/Tacoma_WA/overview
  • https://www.fhfa.gov/DataTools/Tools/Pages/FHFA-HPI-Top-100-Metro-Area-Rankings.aspx?

Spokane Housing Market: Prices, Trends, Forecast 2023

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Spokane Housing Market Trends for 2023

The housing market in Spokane, Washington, has seen steady growth in the last few years, but what does the market look like in January 2023? In this blog post, we will examine the latest housing market trends in Spokane, including the median listing and sold prices, sale-to-list price ratio, median days on the market, and homes for sale in the area.

Median Listing and Sold Prices

According to the recent report by Realtor.com, the median listing home price in Spokane, WA, was $400K in January 2023, which is flat year-over-year. The median listing home price per square foot was $201, and the median home sold price was $340K. As the median home sold price is lower than the median listing home price, it suggests that buyers have some negotiating power in the market.

Sale-to-List Price Ratio

The sale-to-list price ratio in Spokane, WA, is 100%, which means that homes are sold at approximately the asking price on average in January 2023. This ratio indicates a balanced market where both buyers and sellers have roughly equal negotiating power. On average, homes in Spokane, WA, sell after 69 days on the market, according to a recent report. The trend for median days on the market has gone up since last month and slightly up since last year. The following chart shows the trend for median days on the market in Spokane:

The housing market in Spokane, WA, is currently balanced, with a sale-to-list price ratio of 100%, and homes are taking an average of 69 days to sell. Although the median listing home price has remained flat year-over-year, there are many options available for buyers, with over 1,000 homes for sale in the area. If you're interested in buying or selling a home in Spokane, be sure to keep these trends in mind and work with a knowledgeable real estate agent to help you navigate the market.

Spokane Housing Market Trends Year to Date

The Spokane Association of Realtors released its annual housing report, which showed a 20.1% decrease in home sales from January through December 2022 compared to the same period in 2021. The median closed price increased from $370,000 to $415,000 in 2022. Inventory also increased from 273 units in December 2021 to 626 units in December 2022, representing a 1.7-month supply.

The report also showed a decrease in Net Closed Volume for December 2022 compared to the previous month and year, with a total of $237,822,490. Pending sales for the month of December 2022 were $213,790,279, with 494 pending sales processed.

Below is the summary of the annual housing report, released by the Spokane Association of Realtors for single-family residential/site-built properties on less than one acre and condominiums.

  • Spokane home sales were down 20.1% from a year ago.
  • Closed sales from January through December 2022 totaled 6,637 compared to January through December 2021 when the total was 8,311.
  • The median closed price from January through December 2022 was $415,000 compared to January through December 2021 when the median price was $370,000.
  • Inventory at the end of December 2022 totaled 626 units, which represents a 1.7-month supply.
  • At the end of December 2021, there were 273 units, a 0.4-month supply
  • Inventory as of this report totals 233 properties which represents a 13-day supply.
  • The number of new listings from January through December 2022 was 8,841, compared to January through December 2021 when 8,974 new listings were reported.

According to the Spokane Association of Realtors, the Net Closed Volume for the month of December 2022 was $237,822,490. There were 547 listings processed, and 552 closed sales. Compared to last month, Net Closed Volume is down $13,406,973. Listings are down 318, sales are down 41. Compared to last year, Net Closed Volume is down $198,677,597. Listings are down 140, sales are down 479. The mandatory sales volume was $214,552,272. Non-Mandatory sales volume was $23,270,218. Pending sales (figured on the list price) were $213,790,279. There were 494 pending sales processed.

Spokane Real Estate Market Forecast 2023

What are the Spokane real estate market predictions for 2023? Spokane's housing market is shaping up to continue the trend of the last few years as one of the hottest markets in the nation. Let us look at the price trends recorded by Zillow (a real estate database company) over the past year. The typical value of homes in Spokane is currently $370,827, an increase of +3.2% from last year.

It indicates that 50 percent of all housing stock in the area is worth more than $370,827 and 50 percent is worth less (adjusting for seasonal fluctuations). ZHVI represents the whole housing stock, not just the homes that list or sell in a month. The typical home value of homes in Spokane Valley is $385,855, up 4.4% over the past year.

The Zillow report also includes a 1-year market forecast for Spokane, which predicts that home values will continue to increase. The forecast estimates that home values will rise by 3.2% over the next twelve months ending Jan 2024, which is slightly lower than the 4.4% increase seen over the past year. This indicates that the housing market in Spokane may be stabilizing, which is good news for both buyers and sellers.

Spokane Real Estate Market Forecast
Forecast Courtesy of Zillow

Spokane Real Estate Investment: Should You Invest in Spokane?

Spokane, located in the eastern part of Washington State, is a city that has been gaining attention from real estate investors over the past few years. With a population of around 200,000, Spokane is the second-largest city in the state and has a metropolitan area of nearly 600,000 people.

The Spokane real estate market offers a mix of owner-occupied and renter-occupied units, with single-family homes accounting for the majority of housing units. According to data from Neighborhoodscout, one and two-bedroom detached homes are the most common housing units in Spokane, with other types of housing such as duplexes, rowhouses, and converted apartments also prevalent.

The geography of Spokane limits the housing supply, which contributes to the city's strong market performance. The desire to preserve views and community limits the height that builders can construct, while the nearby mountains and national parks limit how far the city can expand. Additionally, the influx of Californians fleeing the state's high housing costs and regulations is driving up real estate prices across the West Coast and the Rocky Mountains, including Spokane.

The Spokane real estate market offers a great investment opportunity for real estate investors. With its strong market performance, limited housing supply, and affordability compared to other West Coast cities, Spokane is a city that should be on the radar of any real estate investor looking to invest in a long-term, lucrative market.

Here are the top reasons why you should invest in the Spokane real estate market:

Affordable housing market

Compared to other cities in the Pacific Northwest like Seattle and Portland, Spokane's housing market is relatively affordable. This means that investors can buy properties at a lower cost and potentially see a higher return on investment. Additionally, Spokane's low cost of living and affordable housing market make it an attractive place for young professionals and families, which drives demand for rental properties.

Strong rental market

Speaking of rental properties, Spokane has a strong rental market. The city has a low vacancy rate, which means that properties tend to get rented quickly. Additionally, rental rates have been increasing steadily over the past few years, making it a great time to invest in rental properties in Spokane.

Economic growth

Spokane's economy is diverse and growing. The city is home to a number of major employers, including healthcare providers, universities, and manufacturing companies. Additionally, the city's downtown area has undergone a significant revitalization in recent years, which has attracted new businesses and residents to the area.

Outdoor recreation opportunities

Spokane is located in eastern Washington, which means it's surrounded by beautiful outdoor spaces. From skiing and snowboarding in the winter to hiking and biking in the summer, there's no shortage of outdoor activities for residents and visitors alike. This makes Spokane an attractive place to live, which drives demand for real estate.

Potential for appreciation

Finally, Spokane's real estate market has the potential for appreciation. While prices have been steadily increasing over the past few years, they're still relatively affordable compared to other cities in the Pacific Northwest. As the city continues to grow and attract new residents and businesses, property values could increase even more in the coming years.

Rental Regulations and Eviction Process in Spokane

Another important factor to consider when investing in the Spokane real estate market is the rental regulations in the area. Unlike some other states, rent control is illegal in Washington State, which means landlords have more flexibility in setting rental rates. They can raise the rent as much as they want, as long as they comply with the appropriate notice period and have not issued the notice to discriminate or retaliate against the tenant. Landlords must provide the tenant with at least 60 days' notice before raising the rent.

In addition to this, landlords also have the right to evict tenants who fail to pay rent or violate the terms of the lease agreement. Before starting the eviction process, landlords must provide tenants with a form called a 14-Day Notice to Pay or Vacate. If the tenant fails to pay rent or comply with the terms of the lease agreement, the landlord can file an eviction lawsuit. Depending on the basis for eviction, the tenant has between 3 and 5 days to vacate the property.

There are some lease violations that are deemed “non-curable.” These non-curable violations require a 3-Day Notice to Quit, and tenants cannot fix the violation and are required to move out by the end of the 3 days. Additionally, tenants can be evicted if they stay in the property even a day after their written lease ends (and have not arranged for a renewal). The required notice time given to tenants is 20 days regardless of their tenancy type.

Overall, the rental regulations in Spokane are landlord-friendly, giving property owners more control over their investments. However, it's important for landlords to follow the proper legal procedures when raising rent or evicting tenants to avoid any legal issues.

In conclusion, Spokane is an attractive city for real estate investors for several reasons. With an affordable housing market, strong rental market, diverse and growing economy, outdoor recreation opportunities, and potential for appreciation, it's definitely worth considering as a place to invest in real estate.

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Spokane.

Consult with one of the investment counselors who can help build you a custom portfolio of Spokane turnkey investment properties in some of the best neighborhoods. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Spokane turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

Apart from the Spokane real estate market, you can also invest in another hot market like Seattle. Seattle’s tech landscape and real estate market are rapidly evolving. Google just upped the size of its new Seattle campus. Facebook has been on a hiring spree in the Seattle area, particularly for its virtual reality arm Oculus, which is growing fast in Microsoft’s backyard of Redmond. GeekWire reported on new HQ leases for top Seattle startups Rover and Outreach. Other companies continue to grow and that will pick up any slack. Tech has blown up Seattle. For the past 5 years, we have seen 50% price growth in this market which has priced out many middle-class buyers.

Another city in Washington where you can invest is called Tacoma. Tacoma sits at the southern end of Puget Sound and straddles Commencement Bay. Being a large port town, it is already flanked by smaller cities and backed by mountains. This prevents the city from simply expanding outward, forcing developers to pay for the more expensive redevelopment of existing properties. This will keep prices in the Tacoma real estate market high as long as the job market remains strong. It certainly limits the ability to quickly bring new supply to a tight housing market that has only 1.5 months of inventory on hand.

The third real estate market which is good for investment is Walla Walla. The Walla Walla real estate market is much more stable than coastal real estate. Property prices have appreciated about six percent in the past ten years. This is slow, steady growth. It is far better than the depreciation you see in some rural areas. It doesn’t provide the excitement of Seattle and San Francisco property prices rising by double digits, but you also don’t see housing prices crash because a tech giant decides they want to leave the area, citing insane real estate prices.

Let us know which real estate markets you consider best for real estate investing in 2020!

Remember, caveat emptor still applies when buying a property anywhere. Some of 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:

  • https://www.spokanerealtor.com/market-snapshot
  • https://www.spokanerealtor.com/mls-weekly-news-information
  • https://www.zillow.com/Spokane-wa/home-values
  • https://www.neighborhoodscout.com/wa/spokane/real-estate
  • https://www.realtor.com/realestateandhomes-search/Spokane_WA/overview

Rental Property Insurance: Protect Your Investment Today

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What is a Rental Property Insurance?

Rental Property Insurance

Rental property insurance is a type of insurance policy designed to protect property owners who rent out their properties to tenants. It provides coverage for damages or losses to the rental property caused by certain perils, such as fire, theft, vandalism, and natural disasters. Additionally, rental property insurance can provide liability coverage, which protects landlords from legal claims and lawsuits brought by tenants or other third parties who suffer injuries or property damage while on the rental property.

The coverage provided by rental property insurance typically includes the physical structure of the rental property, as well as any personal property that is owned by the landlord and kept on the property for tenant use, such as appliances, furniture, and fixtures. Some rental property insurance policies may also cover lost rental income if the property becomes uninhabitable due to a covered loss.

It's important to note that rental property insurance is different from renters insurance, which is designed to protect the personal property of tenants rather than the property itself. If you own a rental property, it's important to consider purchasing rental property insurance to protect your investment and financial interests.

Understanding Rental Insurance Coverage Options

Rental property insurance is essential for landlords who want to protect their investments from unexpected losses and liabilities. There are several types of coverage available with rental property insurance, each of which is designed to provide protection for different risks that landlords may face.

One of the most important types of coverage is property damage. This coverage helps landlords pay for repairs or replacement of their rental property if it is damaged by a covered event, such as a fire, storm, or vandalism. This coverage is essential for landlords because repairs to rental properties can be expensive, and damage can lead to lost rental income [1].

Another important type of coverage is liability insurance. This coverage helps landlords pay for legal fees and damages if a tenant or visitor is injured on their property. Liability insurance can also cover damages caused by a tenant’s actions, such as if they accidentally start a fire. Without liability insurance, landlords could be personally responsible for these costs, which could be financially devastating [2].

Finally, rental property insurance can also include coverage for lost rental income. This coverage provides landlords with compensation if their rental property is uninhabitable due to a covered event, such as a fire or flood. This coverage can help landlords pay their mortgage and other expenses while repairs are being made [1].

It is important for landlords to understand which types of coverage are included in their rental property insurance policy and which types of coverage may be necessary to add. Depending on the specific risks that a landlord faces, additional coverage may be required to fully protect their investment.

Choosing the right rental property insurance policy can be challenging, especially for first-time landlords. There are many factors to consider, including the size and type of property, location, budget, and specific risks that need to be covered. Here are some tips for choosing the best rental property insurance policy:

  1. Understand the coverage options: As discussed in the previous section, there are several types of coverage available with rental property insurance. It is important to understand what is included in a policy and which types of coverage may be necessary to add based on the specific risks a landlord faces.
  2. Shop around: It is important to compare policies and prices from several different insurance companies before choosing a policy. This can help landlords find the best coverage for their budget and specific needs.
  3. Consider the deductible: The deductible is the amount that a landlord must pay out of pocket before insurance coverage kicks in. A higher deductible will generally result in a lower monthly premium, but it may also mean higher out-of-pocket costs in the event of a claim.
  4. Look for discounts: Some insurance companies offer discounts for landlords who have multiple properties, have installed safety features in their rental properties, or have a good claims history. It is important to ask about discounts when shopping for insurance.
  5. Work with an insurance agent: An experienced insurance agent can help landlords understand their options and choose the best policy for their needs. They can also provide guidance on how to reduce risks and prevent claims.

How to Choose the Right Insurance for Your Rental Property?

The number one goal of your rental business should be to make money, not give it away.  One way to protect you and your investment is to have proper insurance in place. Let me introduce you to four insurances that you should consider.

A Good Lease

The first insurance that I possess is the insurance of a good lease and a thorough move-in inspection. More than once I have referred to the pictures of a move-in inspection to counter a tenant's claim about a pre-existing condition. I remember one time during a preliminary move-out inspection I noted a cracked ceramic floor tile. The tenant claimed that it was like that when they moved in.

I turned on my laptop, pulled up the appropriate picture from the move-in inspection, and proved to the tenant that the crack was not there when they moved in. The next insurance that I possess is the kind purchased from my friendly neighborhood insurance professional. However, take note that there is more to consider than just regular old homeowner's insurance. There are several kinds of insurance that you want to consider as a landlord.

Property Insurance

When it comes to insuring my personal rental properties, I have a landlord policy on each rental unit that I own, whether that unit is paid off or not. Landlord policies have the added benefit of additional liability protection for the landlord. You also need to ensure that each policy carries sufficient coverage to satisfy your mortgage lender.

Depending upon your rental's geographic location, there are some additional property insurance policies you may want to consider. In California, many people have earthquake insurance. In other areas, you may want to investigate flood insurance. Your insurance professional can educate you on the particular hazards you might wish to insure against for your area.

Umbrella Insurance

The third insurance that I have is an umbrella policy, which acts like an umbrella over all of my other existing insurance policies. Examples of when this coverage may come into play include when a guest of your tenant slips and falls in one of your rental properties and is severely injured, or when a storm occurs and a neighbor's property is damaged by a tree falling from your property.

Your landlord insurance policy has a liability limit. The umbrella policy picks up after those limits are exhausted and therefore usually carries a very high deductible, $300,000 or higher. Those deductibles seem high until you are sued for $750,000 and lose. In this example, the first $300,000 would be picked up by your primary insurance; the balance of $450,000 would be yours to pay. An umbrella policy helps pay that off. Otherwise, virtually everything you own would be a fair game against that judgment.

Renter's Insurance

The fourth insurance is renter's insurance. Remind your tenants that their personal property and vehicles, or those of their guests, are not covered by any of your insurance policies against loss or damage due to fire, theft, vandalism, rain, water, criminal or negligent acts of others, or any other cause. Coverage for those items comes only through a renter's insurance policy.

Renters' insurance traditionally covers the tenant's and any guest's possessions, like furniture, clothes, computers, and bikes. Additionally, if a plumbing backup floods your property and renders it uninhabitable, the renter's insurance may cover the cost of a temporary place to live until the tenant can move back into your property. Some renter's insurance policies may also have protection for the tenant against lawsuits.

You should always require renter's insurance when the tenant has a pet in the residence. You do not want the tenant's dog biting a neighboring kid and then have the neighbor sue you. At my office, we will not allow tenants to receive keys without proof of a paid-in-full renter's insurance policy. If the tenant does not have a policy at the time of lease signing, we make the tenant call an insurer and obtain one on the spot.

Insurance is all about risk management; you buy or require insurance to manage some of those risks. Knowing your real estate laws is the best defense. After that, obtaining the insurance discussed in this article is an intelligent way to begin managing your risk. By following these tips, landlords can find the best rental property insurance policy to protect their investment and provide peace of mind.

Boston Real Estate Market: Prices, Trends, Forecast 2023

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Boston Housing Market Trends for 2023

The Greater Boston housing market has been cooling down for a while, with sales of single-family homes and condominiums falling both annually and monthly. However, in January, buyer activity intensified ahead of the spring market, with improved inventory levels and modestly declining mortgage rates from their peak last fall. Here are the latest trends in the Boston housing market for 2023, according to the Greater Boston Association of REALTORS® (GBAR).

Sales have fallen in the single-family home market

Sales in the single-family home market have fallen for eight consecutive months, decreasing 33.8 percent from 755 homes sold in January 2022 to 500 this January. Sales volume also reflects a 44.8 percent decline from the 905 homes sold in December, and is the lowest January sales total in 14 years, dating back to January 2009 when 469 homes were sold.

Condominium sales have also fallen

Condominium sales have fallen, although more modestly than single-family homes, as listings are more plentiful, exceeding the number of single-family homes for sale by almost 40 percent as of January 31. On an annual basis, condo sales decreased 24 percent, from 728 units sold last January to 553 in January 2023, and fell 23.2 percent on a month-to-month basis from 720 units sold in December. Last month was the slowest January for condo closings since 2015 when 486 condos sold.

Prices remain below record highs

Median selling prices remain below the record highs reached last June, with the median price of single-family homes down 6 of the past 7 months on a monthly basis. The median selling price declined on an annual basis by 2.4 percent, from $725,000 in January 2022 to $707,250 this January for single-family homes. Conversely, the median selling price for condominiums rose, as more buyers turned to the more modestly priced condo market when mortgage rates continued to climb.

Most properties sold for less than their asking price

Most properties sold in January went for less than their asking price, with the typical single-family home selling for 96.6 percent of its original list price, and the typical condominium garnering 97.8 percent of its original list price. Buyers can't afford as many homes as they could 12 months ago, so many are either unable or unwilling to get involved in bidding wars.

Active listings have improved

Inventory levels have improved, with active listings for single-family homes rising on an annual basis for nine consecutive months in January, climbing 55.5 percent from 595 homes for sale in January 2022 to 925 last month. In addition, condominium listings increased 12.7 percent in the past 12 months from 1,144 units for sale in January one year ago to 1,289 in January 2023. The number of properties for sale also improved on a month-to-month basis by 8 percent for single-family homes and 13 percent for condos.

ALSO READ: Massachusetts Housing Market Forecast 2023

Buyers are returning to the market

With inventory levels expected to improve further in the coming months, buyers are returning to the market. “Buyers are back and eager to get a head start on the spring market now that mortgage rates have retreated a bit,” said GBAR President Alison Socha. “There has been a steady uptick…”

The above trends show that the Boston housing market has been cooling down for some time, but buyer activity has intensified ahead of the spring market, and prices remain below record highs. Most properties sold in January went for less than their asking price, with active listings improving, and buyers returning to the market. These trends are expected to continue in the coming months, making Boston a popular destination for both tourists and job seekers alike.

Additionally, Boston has a rich history and culture that attracts visitors from around the world. From the Freedom Trail to Fenway Park, there are countless attractions and landmarks to explore. Furthermore, Boston is home to several world-renowned universities such as Harvard, MIT, and Boston University. As a result, the city has a vibrant academic community and a highly educated workforce.

This has led to the growth of several industries such as biotechnology, healthcare, and finance. In recent years, Boston has also become a hub for startups and innovation. The city has a thriving startup ecosystem and is home to several accelerators, incubators, and venture capital firms. This has led to the emergence of several successful startups in various industries, including technology, healthcare, and e-commerce.

Overall, Boston's combination of history, culture, education, and innovation makes it an attractive destination for visitors, students, job seekers, and entrepreneurs. As the city continues to grow and evolve, it will undoubtedly remain a top destination for years to come.

Suffolk County, MA Housing Market Trends 2023

Suffolk County is a county in Massachusetts and consists of 22 cities. The county seat is Boston, the state capital and the largest city in Massachusetts. The following housing market trends are based on single-family, condo, and townhome properties listed for sale on realtor.com. Land, multi-unit, and other property types are excluded. This data is provided as an informational resource only.

In January 2023, the median list price of homes in Suffolk County, Massachusetts was $799K, trending up 6.5% year-over-year. The median listing price per square foot was $761. The median sale price was $700K. Last month's supply and demand were similar to that of a seller's housing market. The market had a total sales to total listings ratio above 0.2 which tends to favor sellers.

Homes in Suffolk County, MA sold for approximately the asking price on average last month. Sale-to-List Price Ratio: 99.13%. Ideally, a buyer would prefer a sale-to-list price ratio that’s closer to 90% whereas a seller would always prefer scenarios that can yield a ratio of 100% or higher.

  • There are 22 cities in Suffolk County.
  • South Boston has a median listing price of $949K, making it the most expensive city.
  • Chelsea is the most affordable city, with a median listing price of $489.9K.
  • The city of Boston has a median listing price of 849K, trending up 6.9% year-over-year.
  • The median sale price in Boston is $727K.
  • Homes in Boston, MA sold for approximately the asking price on average last month.
  • There are 65 neighborhoods in Boston.
  • Back Bay has a median listing price of $2.7M, making it the most expensive neighborhood.
  • Commonwealth is the most affordable neighborhood, with a median listing price of $468K.

Boston Rental Market Trends

The Zumper Boston Metro Area Report analyzed active listings last month across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Massachusetts one bedroom median rent was $2,246 last month. Cambridge ranked as the most expensive city in the metro with one bedrooms priced at $3,110 while Brockton was the most affordable city with one bedrooms priced at $1,340.

The Fastest Growing Cities For Rents in Boston Metro Area (Y/Y%)

  • Newton had the fastest growing rent, up 35% since this time last year.
  • Medford saw rent climb 34.6%, making it second.
  • Somerville was third with rent increasing 23.8%

The Fastest Growing Cities For Rents in Boston Metro Area (M/M%)

  • Brockton rent had the largest monthly growth rate, up 6.3%.
  • Somerville saw rent increase 6.1% last month, making it second.
  • Framingham had the next largest rent price growth rate, climbing 4.5%.
Boston Rental Market Trends
Source: Zumper

Boston Real Estate Market Forecast 2023

What are the Boston real estate market predictions for 2023? With steady job growth, huge gains in home equity, and a large population of millennials now in their peak homebuying years, it is predicted that the demand will stay strong, but sales are likely to be down from historic highs while price appreciation should fall to more modest levels. Let us look at the price trends recorded by Zillow (a real estate database company) over the past few years.

The Boston housing market has seen steady growth in recent years, and the trend is expected to continue in 2023. According to the latest data released by Zillow, the average Boston-Cambridge-Newton home value is $606,309, up 5.4% over the past year.  Before we dive into the Boston housing market trends, it's essential to understand the Zillow Home Value Index (ZHVI). The ZHVI is a measure of home values across various geographies and housing types. It is built by measuring monthly changes in property-level Zestimates, which captures both the level and home values.

Boston-Cambridge-Newton Key Takeaways

The following are some key takeaways from the latest Zillow data for Boston-Cambridge-Newton:

  • Typical Home Values: $606,309
  • 1-year Value Change: +5.4% (Data through January 31, 2023)
  • -1.5% 1-year Market Forecast (January 31, 2023)
  • 1.000 Median sale-to-list ratio (December 31, 2022)
  • 45.5% Percent of sales over list price (December 31, 2022)
  • 42.8% Percent of sales under list price (December 31, 2022)
  • 16 Median days to pending (January 31, 2023)

Market Overview and Forecast

Based on the data provided by Zillow, the Boston housing market is expected to experience a slight decrease in prices over the next twelve months. The market overview forecast for 2023 is -1.5%. While the housing market has been steadily growing in recent years, rising interest rates are expected to curb the soaring prices.

Despite the slight decrease in prices, Boston-Cambridge-Newton remains a competitive market with a median sale-to-list ratio of 1.000, indicating that homes are selling closer to their listing price. Additionally, 45.5% of homes sold above their listed price, indicating that there is still a high demand for homes in the area.

Furthermore, the median days to pending was 16, indicating that homes are not staying on the market for long, and there is a quick turnaround time for sellers.

Overall, the Boston housing market is expected to remain competitive in 2023, with a slight decrease in prices but still a high demand for homes. Working with a local partner who understands the market, such as a Zillow agent, can help buyers and sellers navigate the market and make informed decisions.

Boston Housing Market Forecast
Courtesy of Zillow.com

Boston Real Estate Investment: Should You Invest in Boston?

Successfully investing in real estate — whether you are in Boston or anywhere else in the world — is all about correctly timing the market. Knowing when to enter the real estate market can often be a bit of a challenge. Should you invest in Boston real estate? Is Boston a Good Place For Real Estate Investment? Many real estate investors have asked themselves if buying a property in Boston is a good investment. You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2023.

Boston is a fairly walkable city in Suffolk County with a population of approximately 700,000 people, making the Boston housing market rather large on its own. It is a thriving city, which makes it the best location to buy an investment property at any point in time including the present. Since it contains around 80% of all residents of Massachusetts, it is certainly the first place that people choose to research, when they want to invest in the state.

The broader Boston Metropolitan Area or Greater Boston is home to more than four million people. Boston real estate has been one of the best long-term real estate investments in the nation. The Boston real estate market is dominated by rental properties and Airbnb is a great pick for starters. The city is a wonderful place to call home. People want to live in the city, yet the number of new homes being built is relatively low.

Boston's real estate market is vibrant, and plenty of buyers are offering more than the asking price when they love a property. Throughout the Greater area of Boston, numerous investment properties are waiting to be revitalized by a wise investor. But for most people, Boston is a high-priced real estate market, though it isn’t as expensive as Washington DC, San Francisco, or New York City.

Greater Boston is still an expensive place to buy a house, but the years of relentless price increases may be nearing an end. It’s too soon to know if this trend is a blip or if the Boston housing market heading toward some stability. However, new investors should always consider cheaper markets for investment. Because of the large number of students, and college and university faculty, it is a no-brainer for savvy investors to invest in a rental property in Boston.

Rental property in Boston is guaranteed to get a lot of demand from tenants – whether an apartment or a condo or a single-family home.  Any investment property is likely to get rented out fast. Airbnb rentals are one of the best options for real estate investment in Boston. Let’s find out more about it.

Boston has been one of the hottest real estate markets in the country for many years. It is not just an expensive real estate market on the East Coast. It is one of the few in the region not expected to see significant declines. And there are areas we can expect to see significant appreciation due to the sheer demand for affordable housing with easy access to major arteries or public transit.

Boston is an old, East Coast city. We’ve already mentioned the height law and the challenges faced by getting anything approved even with the mayor behind it. Unfortunately, Boston’s entrenched bureaucracy limits the redevelopment of large garages and other major projects that could bring thousands of units to the Boston real estate market.

If it takes ten years (or more) for the Boston Harbor Garage to be redeveloped, and it is far from the only project on hold, then you can be certain to see high returns on any redevelopment project that creates more housing units within existing buildings. Whether this is converting warehouses into lofts or single-family homes into multi-family housing, if you don’t face major roadblocks, you’ll see a great return on the investment.

If you are looking to make a profit, you don’t want to buy the most expensive property on the Boston real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, an investment property in Boston that you might move into or sell at retirement in the future. Either way, knowing your profit potential and purpose is the first thing to consider.

Investing in Boston real estate will fetch you good returns in the long term as the home prices in Boston have been trending up year-over-year. Let’s take a look at the number of positive things going on in the Boston real estate market which can help investors who are keen to buy an investment property in this city.

Boston is Attractive to Millennials

Millennials are a market real estate agents want to cater to since they’re buying homes in mass. And Boston is considered one of the cities Millennials love. The challenge for Millennials is affording a market where the median home costs around $740,000. Yet the demand from young and old alike means there’s very little inventory, much less housing stock considered affordable.

Boston isn’t just attracting young people from across the country – it is also attracting immigration from around the world. The city has seen population growth every year since 2004 in part because of the influx of immigrants attracted to healthcare, biotech, and educational jobs here.

Millennials and older adults alike are choosing to spend more on an apartment, condo, or house to avoid spending hours each week commuting. It is seen as an investment in their quality of life. This explains why downtown Boston is seeing price increases far higher than the rest of the Boston metro area.

Downtown enclaves sell for much more per square foot than properties at the edge of town or in the suburbs; the price hit a thousand dollars a square foot recently. That’s expensive for the U.S. but half the price you’d pay for a comparable apartment in New York City. Ironically, the high price of real estate in NYC explains why many financial firms are expanding in the relatively cheaper city of Boston, home of the mutual fund.

Boston's Job Market Will Keep People Coming

Boston was ranked the best city in the U.S. for startups. A large number of world-class universities provide a large number of skilled workers, many of whom work in medicine, finance, and biotech. The constant creation of new jobs will continue to attract residents and help the city retain the ones it already has. The economy is dominated by services, which usually pay high wages and attract more and more job seekers. All these factors have created a hot housing market in Boston, dictated by both home buyers and tenants.

Guaranteed Real Estate Appreciation

Strong demand plus limited inventory and limited space to grow will guarantee appreciation of any property you buy in the Boston real estate market. Prices are going to appreciate in 2021 by 6-8%. This is only a continuation of the steady property increases seen since the 2008 property crash. This is partly because the market is so built-up already that land prices are high.

Then there’s the fact it can take a long time to get approval to build up. Boston’s mayor is facing flak for wanting to waive the building height rule just once. Ironically, the Boston shadow law that limits the height of buildings in the Boston housing market has the greatest impact on the downtown areas where people most want to see the tall apartment and condo towers built.

The increase in mortgage interest rates is putting pressure on home buyers, limiting what they can afford. This in turn is leading home builders to cut prices on new properties. According to the Washington Post, Boston home builders are cutting the price of properties on the market by 6%. If you have financing or the cash to invest in the Boston real estate market, you can’t pass up a deal like this.

Boston's Rental Market

The Boston real estate market and its environs include a whopping hundred universities, colleges, and trade schools. There are more than 150,000 college students in Boston and Cambridge alone. You could buy properties across the Boston real estate market and cater to students, and your market is so diverse that you’ll always see demand. Boston is landlord-friendly compared to markets like NYC. There is no limit on late fees.

You don’t have to provide notice before entering the apartment. The state doesn’t require rental licenses to become a landlord. There aren’t laws regarding re-keying or pets. A written rental agreement is only mandatory if your tenant is staying for more than 12 months. Evictions are allowed if they are not paying the rent, violating the lease, or breaking the law. You can start evictions two weeks after the non-payment of rent. Since evictions can take weeks, screen tenants well for any property in the Boston housing market.

Rents in the inner Boston Core hit 2800 a month. All those grad students, young single professionals, and highly paid power couples are bidding up the limited housing stock available. If you can find a reasonably affordable property in the Boston real estate market and convert it into multiple units or a more upscale clientele, you’ll enjoy significant cash flow from the property. Any future real estate investor in Boston should also have in mind that the expected rental income for both traditional rentals and Airbnb rentals is high.

The combined effect of high property prices and high rental income leads to a decent return on investment for Boston rental properties. The taxes here are high compared to the U.S. average but lower than in several other states in the area. The income tax rate is much lower than in New York, and property taxes are far lower than in New Jersey. Therefore, you’ll clear more here than in some of the other large Northeast markets.

Luckily for real estate investors in Boston who are interested in Airbnb rentals, they are fully legal in the Boston real estate market and are not even taxed at the moment. Recent discussions among Massachusetts lawmakers failed to result in an agreement on taxes to be charged on short-term rentals.

Latest Rental Market Statistics: According to RENTCafe, 51% of the households in Boston are renter-occupied, which is a significant population. More than 95% of the apartments fall in the range of $2,000 or more, which shows how high are the rents in Boston. As a rental property investor, it should be on your list of due diligence. Do the math and find out the best neighborhood & property that suits your investment goals.

The average size for a Boston, MA apartment is 812 square feet with studio apartments being the smallest and most affordable. 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage.

As of February 26, 2023, the average rent for a 1-bedroom apartment in Boston, MA is currently $2,700. This is a 1% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Boston decreased by -10% to $2,100. The average rent for a 1-bedroom apartment decreased by -10% to $2,700, and the average rent for a 2-bedroom apartment decreased by -6% to $3,200.

  • Two-bedroom apartment rents average $3,200 (a 6% increase from last year).
  • Three-bedroom apartment rents average $3,650 (a 9% increase from last year).
  • Four-bedroom apartment rents average $4,500 (a 13% increase from last year).

Boston Investment Properties: Where To Buy?

In any real estate investment, cash flow is gold. Boston is the top market where real estate investments are safe and have high rates of return. The Boston housing market sees steady population growth, faces limited supply, and can’t go vertical.

This means that those who invest in the Boston real estate market will see decent cash flow from nearly any property and guaranteed appreciation. Allston is an excellent neighborhood to buy an investment property in Boston as the median property price is well below the city level. Airbnb rentals are the best option for real estate investing in Boston.

Good cash flow from Boston investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in Boston in a growing neighborhood would be key to your success.

As with any real estate purchase, act wisely. Evaluate the specifics of the Boston housing market at the time you intend to purchase. When looking for the best real estate investments in Boston, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing.

There are 65 neighborhoods in Boston. As we write this, Downtown Boston has a median listing price of $2.3M, making it the most expensive neighborhood. Commonwealth is the most affordable neighborhood, with a median listing price of $522,000. Some of the popular neighborhoods in Boston are Cambridge, Medford, East Boston, West Roxbury, Allston, Dedham, South End, Dorchester, Jamaica Plain, Roslindale, South Boston, Charlestown, Braintree, North End, and Hyde Park.

The best neighborhoods in the Greater Boston area for real estate investment are relatively affordable. They will offer a good rate of appreciation because of the influx of people moving there for affordable housing. They'll offer strong and rising rents in 2022 and beyond.

Roxbury has seen roughly 125 percent inflation over the past five years, a full 25 percent more price inflation than Boston as a whole. This is because Roxbury remains a relatively affordable area attracting people who are being priced out of rapidly gentrifying Boston. Affordable housing isn't the only reason why we can expect people to move here. For example, the Benjamin Franklin Institute of Technology is considering moving to an available site here.

Northeastern University is considering building student housing here, as well. When Blue Hill Avenue is upgraded, the area will have better bus service connecting it to the rest of Boston. Furthermore, Roxbury is slated for rapid development. For example, there are several opportunity zones here.

The biggest ones are near Ruggles and Roxbury Crossing. Note that the same trends are driving up rents and property values in Jamaica Plain and Dorchester, though we predict the greatest gains near the Nubian Square developments.

East Boston was once a cheap neighborhood because it was so close to the airport and factories. East Boston is in the middle of a building boom, as the old industrial waterfront gains office buildings and codon towers. Yet it has room for massive expansion thanks to the potential at Suffolk Downs.

This will create an explosion of new development, though demand for these properties will be weak for the next few months. This influx of new development is why the area has seen only a 105 percent appreciation over the past 5 years. These properties would be right off the Blue Line. Expect property values to skyrocket once there is regular public transit in the area.

East Boston is in sharp contrast to the slowly gentrifying South End, as young white professionals move into the area, driving up rents and property prices until they move somewhere else.

But it is attracting people who snap up 800-square-foot condos that may yet cost less than half a million dollars. Others snap up the new luxury apartments at Jeffries Point, because of its views of downtown Boston. Note that the area is connected to mainland Boston through the Sumner Tunnel.

Fort Point is a Seaport neighborhood. However, it is in the process of becoming a life sciences hub. Construction could turn the mostly vacated General Electric headquarters building into a life sciences campus. GE has moved its headquarters into one of the remaining buildings.

A former Proctor and Gamble Building is going to become another life sciences building. Expect rents in the area to rise along with the increasing average income in the area. Furthermore, the area is going to gentrify as new mixed-use projects that were recently approved are built. They won't just be on the waterfront anymore. They'll have several new parks, as well.

Here are the ten neighborhoods in Boston having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.

  1. Roxbury Northeast
  2. Washington Park
  3. Central Square
  4. Central Maverick Square Paris Street
  5. East Boston
  6. Harbor View Orient Heights East
  7. Jeffries Point
  8. Roxbury Northwest
  9. Harbor View Orient Heights West
  10. Roxbury East

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Boston.

Consult with one of the investment counselors who can help build you a custom portfolio of Boston investment properties. Depending upon the availability, we can help you to find “Cash-Flow Rental Properties” located in some of the best neighborhoods of Boston.

Not just limited to Boston or Massachusetts but you can also invest in some of the hottest real estate markets for rental properties in the United States. Apart from the Boston real estate market, you can also invest in Jersey, City. The Jersey City housing market is seeing significant growth because it is close to New York City but isn’t NYC. It has several points in its favor, too, like a good job market and local amenities.

Renters and buyers alike are taking notice and helping to make Jersey City the fastest-growing metropolitan area in the state. Jersey City has been busy redeveloping old neighborhoods, encouraging a mix of new retail, luxury housing, and affordable housing. Jersey City is notable for the major redevelopment on the waterfront, known as the Shore, while properties there enjoy a great view of Manhattan.

Jersey City takes things one step further and is setting up a “Friendly Building Program”, where developers build entire buildings were renting through AirBnB is allowed. This is an innovative development in the Jersey City housing market. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Boston turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

Let us know which real estate markets in the United States you consider best for real estate investing! 

This article shouldn't be used to make real estate or financial decisions. Some of this article's information came from referenced websites. Norada Real Estate Investments provides no express or implied claims, warranties, or guarantees that the material is accurate, reliable, or current. All information should be validated using the below references. Norada Real Estate Investments does not predict the future US housing market. This article educated Boston real estate investors. Buying a rental property needs research, planning, and budgeting. Not all investments are good. Always do research and consult a real estate investment counselor.

References

Market Data, Reports & Forecasts
https://www.gbreb.com/
https://www.gbreb.com/GBAR/Housing-Market-Data/
https://www.zillow.com/boston-ma/home-values
https://www.realtor.com/realestateandhomes-search/Boston_MA/overview
https://boston.curbed.com/boston-market-reports
https://www.bostonmagazine.com/property/2018/01/24/boston-zillow-housing-crisis

Pre-COVID stats
https://www.bostonmagazine.com/property/2019/01/31/expensive-housing-market/
https://www.bostonmagazine.com/property/2020/03/16/boston-home-prices-doubled/
https://www.redfin.com/city/1826/MA/Boston/housing-market

Landlord friendly & Rental Statistics
https://www.avail.co/education/laws/massachusetts-landlord-tenant-law
https://www.rentcafe.com/blog/renting/states-best-worst-laws-renters
https://www.rentjungle.com/average-rent-in-boston-rent-trends/
https://www.rentcafe.com/average-rent-market-trends/us/ma/boston/

Reasons to Invest
https://nextcity.org/daily/entry/boston-mayor-waive-building-height-rule-park
https://www.fool.com/taxes/2017/10/09/7-states-with-the-highest-income-tax.aspx
https://www.bostonmagazine.com/property/2018/05/30/boston-renting-crisis
http://charlesgaterealty.com/2018/11/29/boston-strong-the-fast-growing-boston-housing-market
https://www.forbes.com/sites/ellenparis/2018/01/29/2018s-housing-market-looks-good-unless-youre-a-first-time-millennial-buyer/#78138a011885

Bureaucracy
https://boston.curbed.com/boston-development/2018/2/22/17037854/boston-building-height-limit

The Best Neighborhoods for Boston Real Estate Investment
https://www.bostonmagazine.com/property/2020/03/16/boston-home-prices-doubled/
https://boston.curbed.com/boston-development/2020/1/7/21051943/boston-neighborhoods-to-watch
https://www.boston.com/news/local-news-2/2020/07/09/boston-ranked-third-most-gentrified-city
https://www.bostonglobe.com/2020/07/27/business/plans-major-project-along-fort-point-channel-are-moving-ahead/

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