Is Real Estate Still A Good Investment?

It is difficult to get ahead financially. Increasingly people turn to investing with an aim to smartly grow their money while diversifying. Real estate is one of the main investment options that people want to know about, since it is so ingrained in the overall investment picture. Even it can be diverse. Real estate investments can range from residential properties like single-family homes and apartments to commercial properties such as office buildings and retail spaces. But is real estate still a good investment?

As one of the premiere Boston property management solutions, we talk a lot about how real estate is a great investment. Why? Let’s explore why we continually look to real estate as one of the best investments out there.

Table of Contents

• Current Real Estate Market
• Benefits of Investing in Real Estate Today
• Challenges in the Current Real Estate Market
• Why Rental Property is a Good Investment

Current Market: Is Real Estate Still a Good Investment?

The real estate market is experiencing an interesting moment. Is real estate still a good investment? I say yes, but with a lot to unpack.

Let’s look at the Boston market.

The real estate market in Boston looks a lot like a number of other markets out there, while it also has some unique elements. As of September 2024, the market remains highly competitive, with homes typically receiving four offers and selling in around 27 days. The median sale price of a home in Boston is approximately $800,000, which is an increase of 5.3% compared to last year. That means it is generally a seller’s market, which is how things look nationally right now.

But – as is usually the case – there is a mix of high activity in some regions and slower sales in others. For example, areas like Back Bay have seen a 7.2% price increase, indicating higher sales volumes, while South Boston has experienced a 1.4% price drop. The market is cooling slightly, with increased inventory and slower price growth. This trend is partly due to higher interest rates, which have made borrowing more expensive and led to fewer sales.

In general, while the market is not as frenzied as it was in previous years, and it can be generally seen as a seller’s market, it still offers opportunities for both buyers and sellers.

Benefits of Investing in Real Estate Today

If you’re doing your research, you’ll find that nearly every list on every investing magazine or website will likely include real estate as a safe, stable choice for your investment portfolio.

Let us dive deeper. To address the key question – Is real estate still a good investment? – let us get into the benefits of investing in that direction right now.

• Appreciation – Real estate values tend to increase over time, providing a good ROI (return on investment). Historically, home prices have shown long-term, stable growth.
• Equity Building – As you pay down your mortgage, you build equity in your home. This is usually a big part of your net worth.
• Tax Advantages – Homeowners can benefit from various tax deductions, such as mortgage interest and property taxes.
• Cash Flow – For investors, rental properties can provide a steady stream of income. This can increase over time as rents rise.
• Diversification – Adding real estate to your investment portfolio can help diversify your assets, reducing overall risk.

Challenges in the Current Real Estate Market

It’s no secret that any investment options come with risks. While real estate is considered a stable, relatively safe investment, there are always challenges no matter when you get in and in what regional market you are in.

One challenge that investors face is inventory constraints. In many neighborhoods, limited housing inventory leads to competitive bidding. This is particularly true in popular neighborhoods. While research and time can help any particular investor find a good deal that will make them money, a diminished supply of housing in the current market is a factor.

Another related difficulty for many is the general affordability of housing. As prices rise, affordability can become a challenge for first-time homebuyers, as well as first-time investors. This is closely linked with inventory supply, since competition leads to higher prices.

Why Rental Property is a Good Investment

Purchasing investment property in the Boston area may seem daunting. But if you take it one step at a time and do your research, you may find that investing in housing is one of the best decisions you ever made. Is real estate still a good investment? It can be!

Don’t forget that management of the property is a heavy load. If you are thinking ahead as far as property management companies are concerned, consider contacting Bay Property Management Group.

We are knowledgeable in all things property management in Boston and can help you with the everyday administration and upkeep after you have secured a purchase. Property advertisement, tenant screening, rent collection procedures… these are just some of the things Bay Property Management Group can do to help you manage your investment property. So give us a call today!