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2024's Top Real Estate Challenges: Data-Backed Approaches

Updated: Jul 8

The Housing Market: Current Challenges and Data-Driven Solutions

The current housing market presents increasing challenges for investors. Rising costs and intense competition for quality investment leads, amid a persistent shortage of homes for sale, are making real estate investment more demanding.

 

However, solutions exist within the realm of precise data collection and analysis.

 

Key Real Estate Challenges in 2024

Let's delve into the most pressing issues real estate investors face today and explore how data-driven tools can help them refine their investment strategies.

 

Low Inventory

The issue of low inventory remains critical, with no immediate signs of improvement. The U.S. housing market has been affected by low inventory since interest rates rose from the historic low of 2.65% in 2021 to over 8%, causing a significant decrease in homeowner willingness to sell. This reluctance, known as the lock-in effect, has dramatically slowed home sales since 2022.

 

Homeowners are hesitant to sell and take on new mortgages at higher rates, and although interest rates show signs of stabilizing, it is unlikely that they will reach desirable levels in 2024. According to Rick Sharga, founder, and CEO of CJ Patrick Company, a market intelligence and business advisory firm, a meaningful increase in home supply isn't expected until mortgage rates drop to the low-5% range, which is unlikely in 2024.

 

Despite this, investors can still find opportunities by identifying off-market properties owned by motivated sellers. PropStream's advanced data-filtering tools enable investors to search any U.S. market and locate off-market properties with motivated sellers using over 120 filter options. Understanding the specific motivations of sellers, such as financial distress or the desire to downsize, allows investors to tailor compelling offers, enhancing their lead generation strategy beyond traditional methods like SEO and referrals.

 

High Interest Rates

High interest rates impact investors as well as regular buyers, leading to higher monthly mortgage payments and the necessity for higher rent charges, which can make tenant acquisition and retention more challenging. For instance, the average monthly mortgage payment in the U.S. reached $2,268 in 2023, a nearly 50% increase from $1,525 just two years prior.

 

To mitigate these costs, investors need access to comprehensive and accurate data to identify better deals. By filtering property searches based on mortgage type, rate, and balance, investors can find opportunities with existing low-rate mortgages that can be transferred or properties with low mortgage balances that can be quickly paid off, improving long-term profitability. PropStream offers deep insights into over 155 million properties nationwide, providing vital mortgage and financial data to inform better investment decisions.

 

However, it's crucial not to base investment decisions solely on lower monthly payments. Exploring creative financing options can be beneficial, particularly when a property presents a lucrative investment opportunity despite a high-interest mortgage.

 

High Competition for Affordable Investments

The overall higher cost of housing in the U.S. is leading to reduced returns and intense competition for affordable properties. Many investors rely on local agents and the MLS to find below-market-value homes, but competition remains fierce.

 

To overcome this, investors should seek properties not yet listed but likely to be sold soon. Identifying homeowners with a high propensity to sell and gathering relevant data about their situations and properties allows investors to make compelling offers that address the sellers' specific needs. PropStream's data can help identify these opportunities, enabling investors to negotiate effectively and secure profitable deals.


In previous post: "What is real estate?"

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