Investment Property Calculator, Equity Growth, Fed Update

Does it even make sense to buy a rental property in this market with rates and price where they are at? This tool shows the value of purchase real estate in markets that are experiencing both rental and value appreciation. Even if the first 2-4 years aren’t strong cash flow years, the long term benefits are incredible! Reach out if you want me to customize one of these for you or a client interested in investing.

Mortgage Rates – increased slightly last week as the price of Mortgaged Backed Securities continued their downward slide. Rates are up approximately 3% from this time last year.

Home Equity – between Q2 of 2021 and Q2 of 2022 homeowners with mortgages (approx 63% of properties) gained a total of $3.6T – or nearly 28% year over year. The average US homeowner gained $60,200 in equity in 12 months. In that same 12 month period negative equity declined by 18% to 1M homes or 1.8% of all mortgaged properties.

Home values declined very marginally in the month of July but are up 15.8% year over year. Core Logic predicts values to increase by nearly 4% over the next 12 months. While that seems like a small amount compared to the recent two years if you purchaeed a $400k home with 10% down you would gain $16,000 in 12 months which is a 40% return on investment thanks to leverage.

Fed Chair Jerome Powell continues to talk tough on inflation stating that the Federal Reserve is ‘strongly committed’ to fighting inflation. The market is expecting another 0.75% Fed Funds rate hike at the end of the month. This will be in line with the European Central Bank’s recent rate hike which finally gives postive yields.

Mortgage Applications to purchase homes delicned by 0.7% last week and are down 23% year over year. Refinances declined by 1.1% last week and are down 83% year over year.

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