Seattle is a unique city that attracts condominium dwellers. Although there is no shortage of both pros and cons regarding condo living, those committed to condo living have a complex approval process to navigate. Getting an early start on loan approval is crucial to getting the best condo for your family.
Right now is the optimal time to take advantage of the historically low mortgage rates, regardless of whether you are purchasing your first house, buying a second/vacation home, or investing in lucrative real estate ventures such as an Airbnb.
In This Article:
- What Do Low Rates Mean For Those Looking To Invest In Airbnb Properties?
- Why Are Low Mortgage Rates Good For Real Estate Investing?
- Will Rates Continue To Remain Low This Year?
- Is Now The Right Time To Act On An Investment Property?
Mortgage rates were historically low In 2020. And, as we make our way through 2021, it is clear that mortgage rates are likely to remain low, lower than they have been in years. That said, there is no denying that the current mortgage rates are helping first-time buyers, seasoned buyers, and even those looking to refinance. Moreover, the same appears to be true for individuals looking to invest in real estate, especially those currently looking at potential Airbnb prospects.
What Do Low Rates Mean For Those Looking To Invest In Airbnb Properties?
Looking specifically at Airbnb rentals, the market remains very robust–either in spite of COVID-19 or because of it, as many travelers are now actively avoiding hotels. As a result, if you are thinking about purchasing a second home solely for the purpose of breaking into this market, then low mortgage rates will only help to increase your bottom line. Typically, high-end vacation Airbnb homes can go for anywhere from $200 to $2,000+ a night. Moreover, most of these properties have a minimum night’s stay, which means you could have enough to cover your mortgage payment in no time at all; and coupled with lower than low rates, you are likely to see more profits versus overhead.
Why Are Low Mortgage Rates Good For Real Estate Investing?
Similarly, for those looking to invest in certain properties, now is a great time. In fact, in the wake of a global pandemic, there has been what is called adaptive reuse with specific properties like hotels, office buildings, and retail stores that were severely impacted by COVID-19. Adaptive reuse is the process of converting or redeveloping unwanted real estate into a different type of real estate that better serves current and future market demand. Not only will adaptive reuse save many commercial investors, but it will also open new avenues for real estate investors in general.
Of course, it is important to note that much of the value that comes from investing in real estate happens in the long term, i.e., holding property and letting time grow your investment. So, if you are looking to make a short-term investment right now, you might end up slightly disappointed.
That said, affordable housing and industrial real estate are two sectors that are currently in high demand. Consequently, opting to turn an old hotel in the heart of the city into affordable housing or extended stays might be the way to go. Alternatively, converting an old retail building into an industrial distribution center/warehouse to better serve the surrounding community could also be a profitable long-term solution. While there are definitely a number of hurdles to overcome in this process, including zoning and city regulations, there is definitely the potential for real opportunity here.
Will Rates Continue To Remain Low This Year?
Analysts and real estate experts believe that rates will continue to remain low for most of the year. However, it is predicted that rebounding toward the mid to end of the year could occur due to widespread vaccinations, which will likely lead to a surprisingly strong economic activity surge. Moreover, the National Association of Realtors expects mortgage rates to average 3.1 percent this year, which is slightly up from the 3 percent we saw in 2020. The Mortgage Bankers Association also says rates will average around 3 percent or rather at 3.3 percent this year.
As of the first month of 2021, popular loan products such as the 30-year fixed mortgage rate pretty much followed suit and sank to its lowest level (the 17th historic low in less than a year). In fact, the 30-year fixed rate has never been this low since Freddie Mac began tracking mortgage rates in 1971. Not only are current mortgage rates surpassing previous lows set just last month, but also the 30-year rate has fallen more than a percentage point since January 2020—from 3.72 percent to 2.62 percent as of this week. But be that as it may, experts and analysts are still predicting that mortgage rates will steadily rise this coming year, however not by much.
Is Now The Right Time To Act On An Investment Property?
As a whole, the housing market is well past the recovery phase and is now booming with higher home sales. In fact, for the first time since the pandemic began, all four major components of real estate activity—the demand, supply, pricing, and sales—are growing above the pre-COVID pace.
Yet, many experts predicted that the pandemic could lead to a 2021 housing crash worse than the great depression. But that simply has not been the case. At least for buyers and investors alike, the good thing is that house prices have nearly flattened and are poised to remain fairly stable for much of 2021. Finally, thanks to the strong availability of housing stock and overall high rental rates relative to the price of owning a home, the market to invest is definitely more accessible right now.
Ready to Apply For a Mortgage in WA, OR, CO, or ID?
Do you have questions about home loans? Are you ready to apply for a mortgage to buy a home? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington, serving the entire state, as well as Oregon, Idaho, and Colorado. We offer many mortgage programs to buyers all over the Pacific Northwest and have been doing so since 1992. Contact us today with any questions you have about mortgages.