About the Madison Market
Real Estate Investments are not static, but instead are a fluid investment vehicle. The appreciation and sales velocity for 2017 have Freddy Mac calling it “The Best Year in a Decade.” There were some challenges, notably what happened with interest rates. The Federal Reserve increased interest rates three times in 2017. This marks a reversal in a long-term trend since 1986 of interest rate reductions. By historical standards interest rates are low and will likely continue to be for the years ahead. Interest rate predictions are vast and all over the board; the consensus is that there will be increases over 2017 levels, with 30-year mortgage rates increasing by 0.5% to 0.75% by year’s end.
The cost to build has increased dramatically and a topic of conversation with investors and home buyers that have recently built. This is in large part due to the Canadian lumber tariffs - it is more the material costs that have increased versus human capital inputs, to a lesser extent. It is predicted that housing inventories will remain low and the increased cost of new builds will be favorable for sales for the next few years.
With current conditions, such as Baby Boomers renting and young adults renting longer than ever, vacancy rates in residential rentals is very low by historical measures. With that said, in a low vacancy band, we are seeing an upward movement from lows (see graph). In the rental market, incentive offerings are starting to appear, this is not wide spread, but it has been verified in a small segment of the market. To entice renters to a property, gift cards and more than one months free rent have appeared in 2017.
Caribou Property Management, LLC can help position our client’s portfolio holdings to move through the cycles of the real estate market. We analyze and position our management practices to prepare and guide our owners through these cycles. In addition to management, our Caribou Realty Group can help purchase or sell your investment property. Our agents and property managers understand the market and can help you unlock the wealth from real estate.