Home purchase data
The resale home market shows no sign of slowing, meaning investors need to be more mindful than ever before about how much they're paying for new assets they're adding to their portfolios. Remember, you make your money when you buy!
According to Zillow (NASDAQ: Z) NASDAQ: ZG) data, the median sale price of homes sold in May 2020 increased to $263,408. This is a 4.6% jump year over year. It's worth noting that the annual growth in median sale price slowed in May compared to April in 31 of 50 U.S. metros.
Moving on to Redfin (NASDAQ: RDFN), their recent data shows that home listing prices on that platform were up 9% year over year in August 2020 to an average price of $311,000. Further, Redfin found that 46% of homes sold within their first two weeks on the market, a record since recording began in 2012.
Redfin agent Brian Morales said in that report, "The combination of ultra low inventory, very high buyer demand, and super duper low interest rates is a very successful formula for sellers, not so great for buyers."
The bottom line
If liquidity is important to you as an investor, review assets you currently own to potentially lock in some profits by selling, refinancing, or taking out a HELOC.
Investors do, however, need to be very careful in an environment such as this. Prices and equity are increasing at record levels, meaning you have access to more profits but may be overpaying for assets if you don't invest smartly. So what are the other options? Don't rule out new developments, recommission, asset conversions, and off-market deals that can help you avoid overpaying for resale properties.