The stagnant home market poses risks beyond just buyers and sellers as stagnant mortgage rates and high costs are complicating the recovery of initial investment costs. Traditionally, homeowners could expect to break even within five years, but in the current climate, this could be pushed back to a decade or more, especially for those buying in 2025. Factors affecting this include slowing appreciation rates and the condition of the property, further suggesting that buyers need to have adjusted expectations related to market realities.
Investing in real estate is generally a safe bet, but stagnant mortgage rates and slipping home prices threaten to extend the time needed to recoup costs.
It's important for buyers to set their expectations given the market environment they are buying into. If you buy in 2025, you might not recover costs until 2035.
The 'five-year rule' is actually more of a guideline. In slow markets, homeowners may need to hold longer to avoid losses.
Making value-boosting improvements may shorten the timeline for when homeowners get back their investment.
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