Income Property Services, Walnut Creek, California. Complete commerical real esate and investment services.

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INVESTMENT PROPERTY INSIDER

Getting Back to a More “Normal” Market

Can you feel the change?  More “For Sale” signs.  The term “Priced Reduced.”  Slightly higher interest rates.  Fewer people in the “herd” mentality buying real estate for speculative purposes.  The Northern California investment property market has changed significantly in the past 12 months and seems to be shifting away from the frenzy that caused huge price increases, lack of product and heavy competition among Buyers.  Instead, we are experiencing increased marketing periods, fewer offers and less competition.  What does this mean for investment property owners and buyers for the remainder of the year?  If you want to buy or sell, what should you do?  Where is the opportunity in today’s market?

The good news is that, despite the changes, this is still an excellent time to be active in the market.  Some factors that are positive from a Seller’s point of view are:

• Despite minor increases, we still are benefiting from historically low interest rates which make qualifying a property easier and ownership more attractive.  There are plenty of lenders competing to loan money on property.
• There are still plenty of motivated buyers in the market that need to complete Section 1031 tax-deferred exchanges. 
  

Real estate is still viewed as a strong investment vehicle, especially for a long-term holding period.  There is still optimism about owning real estate and it is still viewed as a desirable alternative investment.

Buyers are benefiting from the recent shift in the market in several ways:

• More real estate opportunities actively being marketed means more property to choose from.
• Again, historically low interest rates make it a great time to borrow money.  There are many fixed rate and hybrid fixed/variable rate loan programs available today that didn’t exist a few years ago, and may not exist in the future.
  
• Rapidly escalating construction costs have made the purchase of existing buildings more attractive since, in most cases, they can be purchased well below replacement cost.
• Difficulty and expense in new commercial/investment development makes existing product more desirable.

The point is that it is important to see the opportunity in this market, despite the significant changes.  The successful investors are focusing on their portfolios and their goals to see how they can make today’s market conditions work in their favor.  They are creative and looking at the individual situation, rather than just the overall market. 

At Income Property Services, we help investors evaluate their property to maximize their investments in the current market.  We invite you to contact us for a free, no obligation consultation.