Real estate investing has long since been shrined and favored as one of the most reliable investment strategies possible, and given a couple of home improvements and the land it’s built upon organic appreciation, it’s no surprise why people treat it as the perfect nest egg. Plus, in terms of utility and functionality, the property can double down as a rental investment to create another source of income, or you could also move in and treat it as your primary home.
However, given the red-hot real estate market we’ve experienced over the past year, things aren’t looking as bright or appealing for any real estate investor today. And even if you somehow manage to squeeze out a good deal or find a budding market in a new location, we’re far from any semblance of normalcy in the current market and might not see any substantial improvements for more years to come.
What’s Causing Animosity Toward The Current Markets?
Besides the very obvious long-lasting impacts made by the global pandemic, its ripple effect across many adjacent and associated industries has left a mark that continues to burden sentiment toward real estate investing. And while the inherent value of owning a home and a roof over your head remains unchanged, the ascribed monetary value and price have been all over the place, making it a less financially sound investment, all things considered.
- Forecasts Can’t Agree On A Consensus: Firstly, now that we’re at the tail-end of 2021, it’s natural to expect forecast models that speculate where home trends are headed and how events may play out in the future. However, one problem faced by the very same forecasts is that these models can’t seem to agree on a consensus on whether mortgage rates will persist, home prices will begin to decelerate, or any other related factor changes.
- New Buyers Still Priced Out Of Homes: In addition to deviations and discrepancies among forecast models, new homebuyers are still priced out of listings due to affordability issues. And even if some are forced to purchase at such high prices out of fear of rising mortgage rates, it only further proves the overvaluation of many houses available, which points to a potential crash in the near future. As a result, the risk involved in a purchase is more difficult to ascertain.
- Dysfunctional, Underlying Supply Chains: Apart from home affordability, the underlying supply chains that support the real estate market are currently going through resurging supply constraints. For example, wood and lumber recently soared to a six-month high as strong building demand entered with the season. But with not enough going around to meet current demand, housing costs are expected to rise, and that’s not accounting for the already problematic home price growth.
Where Should You Direct Your Money Instead?
As a result, it’s clear that investing in real estate and purchasing new properties to hold for long-term gains isn’t as profitable due to market circumstances, and even if you manage to hold out long enough, the risk of onerous short-term losses is too much. Therefore, you should direct your money elsewhere and look to reshape your investment portfolio to match better-performing investment vehicles going into 2022.
- Diversify Into Cryptocurrencies And Blockchain ETFs: Cryptocurrencies have taken the world by storm, and if you think that its most recent jumps in prices and market capitalization are already stellar, then expect more to come as mass adoption continues. They have yet to break through and enter the mainstream market, but as soon as that’s accomplished, another bullish run will reflect an increasing volume of orders. So, don’t shy away from diversifying into crypto-related assets and blockchain ETFs.
- Rebalance Your Current Investment Portfolio: If you’re still holding onto an investment portfolio that’s more defensive and aligned with the health sector due to the global pandemic, we recommend rebalancing to reflect current changes. For example, you can afford to increase your risk appetite due to global economic recovery, and trading in for more tech-related stocks to replace your bonds will net you more as the economic activity gets back up to speed.
- Invest In Your Health And Well-Being: Last but not least, directing and investing your money shouldn’t only concern monetary gain and future economic benefit, but also taking care of yourself. And if you have a little bit extra from your active income to utilize, then using the money to care for your well-being like seeking medical attention, truScuplt fat reduction, or other pressing matters are equally important. At the end of the day, spending accrued wealth to maintain your health should always take priority.
Value Long-Term Financial Stability Over Short-term Gains
Overall, there’s no telling how the real estate market will fare going into 2022, and while the advice mentioned above is speculative at best, prudence and conservatism are still preferred in times of uncertainty. So, when planning out next year’s investing strategy, value long-term financial stability over any immediate gains.