Hey Taylor – My wife and I are looking to buy a rental property this year, but we’re both getting cold feet because neither of us knows if this is a good time to buy or not. What’s the current real estate climate and should we even consider it? – Dan
Hey Dan – Considering real estate can be a good option. No matter the climate or cost, it’s an investment worth thinking about. That said, there are definitely good and bad times to buy, and understanding the state of the market is really important. I can’t give you a definitive Yes or No on whether you get a property this year, but I can point out some things to consider.
–1. Sprawling demand. Remote work remains the norm in our post-pandemic world, with more companies moving workers out of office spaces and more employees living where they want as opposed to finding a home near their office. Not surprisingly, this shift has created a ripple effect in the real estate market. For investors, this means suburban and rural homes are getting more expensive and appeal to a broader base of tenants. City living isn’t going anywhere, but you don’t need to spend a fortune on a condo downtown to ensure you get a renter. If the property is nice enough, you should be able to get a tenant even if you’re not in some commercial hub.
–2. Interest rates are what they are. With inflation pressures continuing to affect the global economy, most central banks have kept rates elevated. For buyers, that means mortgage payments are a little more painful, and financing costs are higher overall. This isn’t great news when it comes to your monthly bill, but higher interest rates usually lead to reduced competition and price stabilization in certain areas. This could be a golden opportunity to scoop up a property at a better price, especially if you’re focused on long-term growth. If the price tag is too daunting, think creatively about financing—seller financing or partnering with other investors to spread out the cost. Even with higher rates, real estate is still a strong long-term bet, as demand for housing doesn’t go away just because rates go up.
–3. AI and PropTech In 2025, PropTech (property technology) and AI are changing the way investors find, analyze, and manage properties. Apps that streamline the buying process and AI that helps predict market trends are guiding buyers and therefore heavily influencing property sales. If you’re not using these tools already, it’s probably time to start learning. You can get a quick analysis of your area to figure out where to buy and what other people are paying. You can also start looking into the automated services that landlords use to lower the time commitment of property management.
The real estate market is constantly changing, but historically, it has shown resilience and potential for growth over the long term. Be studious and thoughtful, and when you and your wife find a property that feels right, consider moving forward with it. Thanks for the question!
TAYLOR J KOVAR
CHIEF EXECUTIVE OFFICER
CERTIFIED FINANCIAL PLANNER™
