Somehow, we are moving quickly through 2023. Are you managing to keep up with the real estate market?
The trends and predictions we have for the rest of the year are based on the shifts that we’ve been watching with interest over the last year. It has been an interesting year for the real estate market in Idaho Falls and Pocatello.
We aren’t unique. The real estate market has been pretty wild throughout the entire state of Idaho and throughout the entire country. We have seen high prices, high demand, and low inventory in the real estate sales market. All of this, as well as economic shifts and inflation, has had an impact on the rental market.
Let’s take a look at where we are and what you can expect if you’re buying, selling, or setting down a strategy as an investor with rental properties.
The rental market is strong and so is the real estate market. Here’s what we can tell you.
Keeping Up with Market Shifts
It’s easy to look at the real estate market on a huge, general, and macroeconomic level, but it’s not really a good idea to make predictions and trends without paring it down to the part of the market that impacts you and your investments.
Real estate is extremely local.
While there are a number of nationwide trends that are hard to ignore, it’s important for investors to focus on their local markets and the nuances that come with them.
No one can predict the future. But, we can study the trends. We can get to know what’s happened historically. We can carefully track shifts in the market, but we don’t really know what’s coming at us next. No one could have predicted the pandemic, for example. We’re making judgment calls and decisions based on what markets have done before, what we expect the real estate landscape to look like in the future, and how consumers are responding to inflation, higher prices, and a little bit of uncertainty.
Selling a Property in 2023
A year or two ago, everyone was selling properties. You remember; prices were high, inventory was tight, and if you had a home that you were ready to move on from, it was a perfect time to sell for your asking price. Probably above the asking price.
Price points are still high if you look at the real estate market today in Idaho Falls and Pocatello. Home values have risen and while prices may have begun to peak, they’re still higher than they were. There’s been some comfortable appreciation. But, you might also notice that a property’s time on market is longer. Homes aren’t moving as quickly as they did a little while ago. There are fewer bidding wars. Less of a willingness among buyers to make offers over the asking price.
A huge part of this peak is the inflation that the entire country is experiencing. It has hit the real estate market especially hard, lifting sales and rental prices and making the home buying process more expensive. The interest rates have been rising consistently, and there’s talk that they may rise again.
Anyone buying a home with a traditional mortgage will find themselves paying more to borrow the money. That’s slowing things down on the sales market.
If your home isn’t already on the market and you’ve been thinking about selling it, you can still make some good money on the sale in 2023. But, if you’re not in an urgent situation, you might want to wait. The window for your best opportunity is closing very quickly.
Rental Market Impacts in Idaho
There are some good reasons not to sell your home as we move through 2023. If you’re thinking that you might want to hold onto the asset, there are lots of opportunities in the rental market.
Throughout Idaho, the rental market is expected to stay strong. Because buying a home is so cost-prohibitive for a lot of people, they’ll remain as renters for longer. You’ll have a large pool of well-qualified renters who are ready to lease your home. They’ll pay rent every month, take care of your property, and help you pay down the mortgage.
By the time the market recovers and you’re ready to sell, you’ll have a lot more equity. More money will be made.
There are some great reasons to leverage the rental market and hold onto your home:
- Renting out a home also means you can take advantage of some generous tax breaks. You can deduct the cost of interest, depreciation, maintenance, and professional services like property management.
- You have tenants contributing to the cost of owning your asset.
- You’ll earn both short term recurring rent and long term return on investment (ROI).
Property owners would do well to partner with a professional Idaho property management company to lease, manage, and maintain the home they decide not to sell in the current market.
It may seem like rental values cannot possibly get any higher, but we believe they will remain pretty high throughout 2023. You can set a comfortable rent for a vacant property and you can continue to raise rents when you’re renewing a lease agreement.
Economic Realities and the Real Estate Market
As the market begins to cool and prices begin to drop or stabilize, we don’t expect this to be anything as dramatic as 2008. But we are planning for a real estate market that feels a bit tighter and a lot more expensive. This might put you in a challenging position as an investor. If you can buy in cash, you can avoid the high mortgage rates. You’ll also find your offers are more competitive. If you’re hoping to finance your next acquisitions, you’ll run into some hurdles and some higher costs.
The higher interest rates are meant to slow down inflation. They will also slow down the pace at which the housing market is moving.
If you’re seizing on this opportunity to grow or diversify your existing real estate portfolio, you should be looking for leads. Networking and relying on the information provided by local housing experts will help you navigate the current market and make some progress.
We always talk about the importance of a good real estate agent, especially now when the market is shifting. You also need a property manager who can tell you what types of rents you can expect from a particular property and how long it will take you to get that home rent ready. Maintenance costs are rising, so you’ll also rely on their expertise to help you budget for repairs.
Talk to other professionals as well. Keep your network close. If something is about to be listed that might work for you, it’s important that you know about it as soon as possible. Stay in touch with agents, Realtors, brokers, lenders, construction companies, and vendors. Get online and search the listings whenever you can. Check for auctions.
This is a good market for investors, and a changing market for homebuyers and homeowners. Depending on where you are and what you’re hoping to accomplish, you’ll need a strategy for getting through it.
How Can We Help You Meet Your Investment Goals?
As you’re thinking about investing in the 2023 real estate market, surround yourself with experts. This is always our recommendation, but it’s especially necessary now. You need a network of agents, brokers, lenders, property managers, lawyers, insurance experts, and maintenance vendors.
We are able to identify shifts and trends in the 2023 real estate market and make predictions because we spend every day studying the market. We know the properties that are for sale and we know what to expect from the growing inventory. We also understand the tenant population, the rental values, and the competition that you’ll face from all the single-family homes, condos, and multi-family units that are currently on the market and expected to come onto the market.
We can tell you about economic factors that are influencing the real estate market; how the pace of job growth contributes to whether or not prices rise, stay the same, or drop. We can talk about neighborhoods and demographics and parse through who is buying, who is selling, and who is renting.
If you’re a real estate investor in Idaho or an investor from outside of Idaho who is interested in our market, one of the most important tools in your toolbox is your written set of investment goals. Understanding what you want to accomplish and how you plan to get there will help you succeed in any market.
You don’t need perfect conditions to make money in real estate. Not now, and not in any market. As long as you understand your investment goals and you’re willing to identify the opportunities that present themselves, you’ll grow your portfolio and succeed as an investor.
Let’s talk about how we can help you take the right steps in 2023. If you’d like some investment help in Idaho Falls, Pocatello, or the surrounding areas, please don’t hesitate to contact us at Jacob Grant Property Management.