Beebe and O'Neil

How recent developments in real estate may affect investments

Investing in Connecticut real estate is a great way to make money as a landlord or through flipping houses. However, recent developments in the market may threaten this. As real estate prices continue to climb, buyers are stepping back from the market. High interest rates further put these homes out of a buyer’s reach. For people who may buy cash via a short sale, this may be a great time to beat the competition. For everyone else, the situation may be more unfavorable.

CNN reports that new home construction has slowed, which results in less new homes hitting the market. One of the reasons for this is the crackdown on immigration. Immigrant laborers often took on much of the residential construction work and with that labor pool potentially shrinking, less people are taking on the challenge of building a home from the ground up.

To add to this, there are some indications that foreclosures are on the rise. These were common during the 2008 recession as people were allowed to take on mortgages they could not afford. Banks now follow stricter rules about who they lend to and how much. This time around, natural disasters may be behind the foreclosures as they seem to be highest in areas hit by hurricanes.

In spite of these dismal figures, CNN still recommends real estate as a great long-term investment. The key is to choose the right real estate investments. Student and senior housing tend to be safe from the consequences of recession. Finally, to limit how much of the sale price needs to be financed at these high interest rates, it is a good idea to put down a big down payment.

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