Your Best Real Estate Move: Flip or Hold in 2015?
Wild fluctuations in the nation’s real estate cycle have taken investors on a roller coaster ride since the early part of this century. From overheated home prices to the housing crash to the post-recession era, investors have had to adjust and adapt their investment strategies to market conditions.
So which strategies are best for real estate investors next year?
The Big Picture for 2015
Looking at the nation’s housing and economic indicators, there is plenty of positive news to justify continued investor optimism in 2015. Home sales –- both existing and new — are projected to increase next year, which is welcome news for fix-and-flip investors.
At the 2014 Realtors Conference & Expo, Lawrence Yun, chief economist for the National Association of Realtors, predicted a rebound for existing home sales for the next two years and projected the national median existing-home price will rise at a moderate 4 percent in each of those years. On the new home front, David Crowe, chief economist for the National Association of Home Builders, said in an October webinar that multi-family housing starts were projected to hold steady in 2015.
“Multi-family housing starts have rebounded back to normal since the downturn, mostly due to the strong demand for renting,” said Yun, who also noted that renter households have increased by 4 million since 2010, while homeowner households have decreased by 1 million.
Two major concerns remain: tight lending standards, which continue to keep people who could otherwise afford to buy a home from qualifying for a loan, and interest rates, which could reach 5 percent by year-end.
Looking at the Numbers
Daren Blomquist, vice president at RealtyTrac, says he believes 2015 is going to be a better year for buy-and-hold investors than for flippers — with the caveat that real estate values vary from area to area and property to property, so investment strategies will have to adjust accordingly.