Precautions, Plans and Preparations – Dealing With Market Volatility

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By definition, volatility in the context or financials and/or real estate is “tending to fluctuate sharply and regularly” – so it is no wonder that investors and property owners alike react to unstable conditions in the market.  As we rifle through one of the hardest hit economies that hit in the late 2000s and deal with some of blows in real estate, savvy business-minded people are making decisions to protect themselves and their assets.  In this article, we take a look at what property owners are doing as a precaution, how they are planning ahead and what steps they are taking to prepare for the seemingly endless volatility being experienced today.

Precautions To Prevent “Storm” Damage

One of the easiest parallels to illustrate weather instability with that of financial and property markets is to equate structural foundation with housing prices.  In other words, when it seems bad weather is on the horizon, people tend to make solid their structures at the seams.  They put up strong boards to ward off high-force winds.  Measures are taken to remove people from the immediate vicinity as they brace themselves for the impending storm and ensuing damage.

Similarly, as homeowners can see housing prices continue to plummet, they are taking drastic measures as a precautionary action to protect themselves for further damage.  By selling at a time when it appears that waiting could prove even more financially detrimental, homeowners are taking the extra precaution not to lose more money in wake of further housing price dips.

Plans That Look Ahead to the Future

With our recent stock market plunge and jump back up again, back and forth – a sense of worry was sparked within the average investor.  For people who own stocks as their primary form of investment, many lessons have been learned.  This is especially true for those who chose not to diversify as many financial planners typically encourage.  So as the current potential for reasonable and sizable returns on investment appears within reach through the real estate sector, the average homeowner and investor alike has been seeking out investment opportunities through this avenue.

With the current interest rates as low as they are (likely the lowest that many real estate agents have witnessed through the life of their entire career), it makes good sense to invest in property, with the expectation that prices will jump back up eventually and yield a considerable return.  This action of buying real estate solely as an investment may not be as mainstream had it not been for the recent volatility, taking place in our financial markets.  Income-generating properties are hugely popular during this time of uncertainty, demonstrating that volatility in one area causes action in another.

Preparing to Face Uncertainty Now for Prosperity Later

Seizing the opportunities that do present themselves is a key factor in preparation for a better time yet to come.  Despite the unstable conditions around us, many buyers are jumping on the bandwagon and getting in on incredibly low mortgage rates that will lock in for the 15-year of 30-year term they secure.  Coupled with the other market factors that make it a heavy buyers’ market, such as high inventory levels and low housing prices – the signs of prosperity are within close reach for these investors.  Though many are opting to “wait the market out” until their home value seemingly increases, realistically the amount of appreciation that would need to take place would take years.  Better yet, savvy buyers invest in a property that is bigger and better than the current one, so that when the market does rebound, they are left with a stronger property but locked in at incredibly low rates.

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Clearly, trials and tribulations strengthen us – helping us to build a solid defense against future occurrences of the same thing.  Just like a passing storm that has the power to ravage through an entire region and leave nothing but devastation in its path; so is a weakened financial market that leads to uncertain ripples in the real estate world.

To understand how you can take precautions, plan and prepare for what lies ahead, visit your Realtor for an in-depth consultation where you will discuss relevant information to help you make informed decisions that work for you.