For more than 5 years, the U.S. has teetered on the brink of a housing crisis. With plummeting values and a marketplace where consumers could simply not afford to buy, many home-owners have been forced to hold on to their property while carrying significant levels of negative equity. The tentative recovery in the American economy has triggered something of a resurgence, however, as housing prices have soared by 11% in the last 12 months and sustained the biggest gains since the real estate boom of 2006.
How Landlords Can Protect Their Investments in an Unstable Market
There are concerns that the market has now turned full circle, however, as there are now signs of excess and frenzied purchasing nationwide. While some may suggest that this is indicative of a prospering market, economists are fearful that we are actually witnessing the birth of a new housing bubble. The fact remains that prices are currently rising at an unsustainable pace, and masking the sober truth that could ultimately trigger another real estate collapse. If you are a landlord, then there is a pressing need to protect your investments and adopt a risk averse approach to buying new property.
As a starting point, it is worth taking care to ensure that you have adequate insurance coverage for your existing policies. If the market is primed for a sudden downturn, you can ill afford to leave your property portfolio at the mercy of fate and misadventure. In addition to arranging buildings insurance and striving to purchase policies from a single provider, you should also ensure that your tenants are covered by renters insurance, as this will create a comprehensive level of coverage that can provide peace of mind in a volatile market.
Think Carefully About Buying and Selling Property in 2013
The surge in property prices and buying volume has been primarily driven by a government drive to slash borrowing costs, and this in itself suggests that the markets recent growth is less than reliable. It also means that as a property owner you should remain extremely cautious when considering the procurement of additional homes, as low borrowing rates and disproportionately high prices often create a misleading market that is susceptible to sudden peaks and troughs. Unless you can identify a genuinely low cost home that has excellent resale value, you should perhaps looks to consolidate your existing portfolio.
The opposite is true with regards to selling, however, as the current market is ideal for individuals who are looking to maximize the value of an existing property. While falling borrowing rates have again proved influential in increasing the demand for U.S. real estate, soaring consumer confidence has also encouraged American citizens to invest their capital. As a result of this, property owners are in the midst of a sellers market, where current prices are slightly disproportionate to value and continuing to rise considerably.
The Last Word
If the recent recession has taught one lesson, it is that we should be wary when considering supposedly positive economic portents. The current housing market provides a relevant example, as dramatically rising prices are not indiciative of a sustainable economic recovery. Instead, they are to be treated with caution, especially if we are to avoid another real estate collapse.