Image attribution: Philip Taylor PT; CC By 2.0
By Georgina Clatworthy
While most news stories today tend to reflect upon the negative aspects of the real estate and financial markets, the fact is that there are some regions that are actually doing very well and are worth investing in. Such is the case with Northern Virginia, which has seen a rise in recent real estate sales.
Most people would be surprised to learn that in the early 1990s the crisis issue was strictly due to mortgages, but rather, the short term bank loans required to support land development and acquisition. The lack of financing available caused a massive number of foreclosures along with a great deal of undeveloped land. As a result, the market for builders and land grew as a result of the foreclosures. Land became available and new homes could be built for much less money than what they were actually worth, so home values continued to drop.
Every period of real estate value decline was not actually caused by a national recession, but rather, masked by them. Funding policy is nationally mandated. Another issue is that during recent periods of decline, it appeared as though no one saw the tumultuous events coming until they actually occurred.
Northern Virginia real estate values
Many realtors, such as Avenue Realty, LLC - Agents with offices throughout Northern Virginia - are pointing out that the markets are local and Northern Virginia’s real estate values have managed to survive despite several soft economies without losing any value. This has allowed the Northern Virginia real estate market to continue to offer investors with many beneficial and fruitful opportunities.
While the national unemployment rate teetered at 9.8 percent over the past few years, the combined unemployment rate in Northern Virginia counties was only around 4.2 percent. When the national rate descended to 8.7 percent, local Northern Virginia unemployment rates were at merely 3.7 percent. These statistics greatly affect the ability of residents to make mortgage payments and invest in real estate.
Real estate investments
There are two main kinds of real estate investments for investors. The buy and hold type involves long term investments that fluctuate, while the fix and flip method pertains to renovating under market properties to sell at market rates.
It is estimated that over 50 percent of all millionaires earned their fortunes through real estate. Many of these millionaire investors are simple, everyday people who recognized opportunities in real estate and took advantage of them.
Best ROI property investments
One of the main benefits to long term rentals is appreciation. While the stock and real estate markets both experience fluctuations, real estate is far more predictable over longer periods. Even when the stock market rises, there is no guarantee that the value of specific stocks will increase in value.
The past 50 years has seen the average annual real estate appreciation nationwide at around 5 percent. However, purchasing property in an area that has a strong local economy and has a high housing demand - such as Northern Virginia - guarantees an increase in value over time. Also, rental amounts received increase over time, while fixed mortgages stay the same. Therefore, investors net more earnings each month for rental property. The longer the properties are owned so that mortgages are paid off, the more cash flow will be received.
Real estate market forecast
Each real estate market is different. Therefore, it is inappropriate to lump them all together as part of one market. The simple fact is that over time, there is no other investment strategy that guarantees as much of a return as buying and holding property rentals. In fact, there are also plenty of tax incentives for owning these properties from a business perspective.
As long as sales markets remains lower than usual, rental properties will remain stronger than ever. However, markets like Northern Virginia will most likely continue to remain solid. This means that investors have choices. They can decide to invest in houses and rental or other properties. The market in Northern Virginia is doing so well that some companies are working on creating investment pools to buy several properties during the year.
About the author: Georgina Clatworthy is a writer and blogger with an interest in topics relating to real estate, investment and property. Avenue Realty, LLC - Agents with offices in Northern Virginia - use their experience and knowledge of the area to help the public get the most from the process of dealing with real estate transactions. They believe that home buying and selling are many times life milestones, and meant to be celebrated.