Real estate experts are weighing in on the real estate market, as it becomes increasingly clear that it’s time to reconsider your investment strategy.
Is your investment in real estate worth a billion dollars?
The market is a mess right now.
According to Zillow, there are a whopping 12.2 million properties listed on the market.
Of these, more than 8 million are for sale.
The rest are on the verge of collapse.
So what is the point of a billion-dollar property?
The average price for a $1 million house is $9,000, according to Zumper, and that number is expected to rise as home prices continue to fall.
That means if you bought a house for $1,000 in 2019, you’ll have paid off the mortgage in five years, or roughly $4,000 more than you’d have had to pay in ten years.
The average home price in the U.S. is $1.5 million, according the Real Estate Board of Greater New Jersey.
That’s almost twice as much as the median home price of $800,000.
But why would anyone ever buy a house worth $1 billion?
It’s simple: the market is crazy.
As of the end of August, there were nearly 1.7 million properties for sale in the country, according Zillower.
That number will soon increase, as home values continue to decline.
So how much does it really cost to buy a home in New Jersey?
In New Jersey, an average home is valued at $1 a square foot.
That is, if you put a $100,000 down payment on your home, the median price would be $1m, or $5.35 million.
And it doesn’t even include the value of your down payment.
For example, a $2.9 million house in New York would cost $1bn to buy.
If you’re paying off a mortgage in the first five years of owning the home, you’d pay $1b a year on average.
But you’re not paying a lot, right?
A $1billion home might not seem like much, but it’s actually quite a bargain.
If it goes on to sell for $2,000 a square-foot, you’re looking at a return of $250,000 per year.
And if it sells for $3.4m and goes for $5bn, you’ve got a return on your investment of $7.2 billion a year.
What’s the catch?
There are some caveats.
New Jersey doesn’t count income tax on the sale price, so you can’t count a home that goes for more than $1million as being a real estate investment.
And, yes, there’s a catch: if the price goes up, you have to pay more for the home.
But if you look at the chart above, you can see that even with the $1-billion home, a lot of people are taking advantage of the current market, even if it’s not worth a lot.
The median home prices in New Zealand are $1mm, or 1.9mm above the U-turn in the market that saw prices fall by more than half last year.
This year, the average house price in New Zeland is about $1mil, or 7.5 times the median house price.
In Australia, the house price has fallen by nearly 40 per cent since the end to August.
But it gets worse.
If the median prices keep falling, and real estate agents and developers keep adding to the market, the price will fall even further.
That would mean that if you buy a $10 million home, your investment would be worth only about $6 million in ten to fifteen years.
A big part of the reason why we’re seeing such a steep decline in house prices in the United States is because of the Federal Reserve’s massive bond purchases.
In March of 2017, the Federal Government sold $700 billion in bonds to prop up the economy.
But if the bond purchases continue, it will likely cause another massive bond buying spree in the years ahead.
As long as the economy is strong, and prices continue falling, the dollar will keep getting stronger, and the price of a home will keep going up.
But with interest rates at record lows, that won’t happen.
In fact, it’s likely that the dollar won’t even stay at current levels for long.
The Federal Reserve has signaled that it will cut interest rates even lower if the economy falters, and even though inflation is running at record low levels, the Fed is still keeping interest rates low.