Challenges to know about when buying real estate


It is critical that you perform due diligence prior to buying commercial or residential real estate properties in North Carolina. Understanding existing market conditions may help you make what is likely the biggest purchase of your life in an informed and confident manner.

Interest rates may remain elevated

Mortgage interest rates increased throughout 2022 and may continue to go higher as the Federal Reserve takes steps to make borrowing money more expensive. In addition to increased borrowing costs, inflation has caused home prices to continue their ascent. However, the combination of increasing interest rates and rising prices may eventually result in a recession. This means that home values could come down and erode any equity that you might have in it. A recession might also result in job losses or reduced wages, which may make it harder to pay your mortgage. If you purchase commercial real estate, a recession may mean that you’re vulnerable to vacancies and a loss of rental income.

The labor market has changed

Since 2020, employees have been given greater leeway to work at home. This means that companies may choose to rent smaller buildings or use shared spaces instead of operating from dedicated corporate campuses. Employees are also more likely to quit their jobs if they aren’t happy where they are, which may mean that they may want or need to break a rental agreement. They may also be less likely to buy or rent your home, which may depress your property’s value.

Buying real estate may be an effective way to diversify your investment portfolio or provide stability for yourself and your family. Having an understanding of short and long-term market conditions may reduce the odds that you buy something that will struggle to appreciate in value while you own it.