A 2018 Zillow survey reveals that there is a slowdown in property appreciation in the United States. From an annual growth rate of 8%, real estate experts who participated in the survey predicted it to go down to 4.1% at the end of 2019. The trend is projected to continue in the coming years, declining to 2.8% in 2022.
If you are buying a house in Fort Myers, Florida, or any neighboring community, the bleak outlook for future land appreciation rates should not discourage you, but it should concern you. Any reputable mortgage company in Naples will advise you the following to minimize the impact of this slowdown on your financial life:
You Should Be More Selective in Choosing a Location
As you know, location is key in real estate. Even if land appreciation rates go down across America, some places do not experience sharp property value fluctuations and can bounce back when the economic conditions improve.
As a general rule, locations with stable local economies, low crime rates, and promising development projects do not get affected by real estate bubbles as much. After all, the high housing demand in such areas is not purely based on speculation.
Be objective to identify and avoid overhyped communities and neighborhoods. When the economy turns sour, these places are likely to lose a significant portion of their populations more quickly, which will result in fast property price reductions.
You Should Anticipate a Recession to Happen
Why should you think like an economist when you just want to buy a house? Understanding the basics of economics can help you make a sound decision when picking a property and selecting a sensible mortgage.
Most things are not always what they seem, which is why millions of families lost their homes to foreclosure in the 2008 financial crisis. Over 10 years later, many of them have yet to put their lives back in order.
Making housing decisions with the possibility of a recession in mind will allow you to prepare for the worst, protect your finances, and keep your roof above your head.
You Might Want to Pay a Larger Down Payment
A large down payment makes a good cushion against significant property value drops. Putting down more than the minimum amount you are required to pay allows you to build home equity fast, which can keep your mortgage above water in case another housing bubble bursts.
A sizable down payment also comes with many other benefits. It can help you save more on interest, for it lowers the size of your loan, acts as a bargaining chip in mortgage rate negotiations, and helps decrease your monthly payments. If you can’t put down 20% of the property price up front, producing a bigger-than-usual down payment lets you cancel the private mortgage insurance more quickly.
The slowdown in land appreciation will not harm you financially if you play your cards right. Be prudent enough to identify and calculate the risks to mitigate the dangers of home ownership.