Global Property Forecasts And Trends For 2020

Image by F. Muhammad from Pixabay

Wealth Fluctuation

Because of many factors, what were once considered “basic” homes are becoming beyond the grasp of normal people. In Los Angeles, $500k gets you a shack in a bad neighborhood and a bunch of taxation to boot. Going into 2020, there’s a very high likelihood that an increase in smaller homes and more “sustainable” properties will define the market.

You can build a “tiny home” for $20k, including the property on which it sits. Amazon has a “kit” right now that you can buy which allows you to build your own tiny home for $19k. Across the world, there’s a massive trend toward “tiny home” living. This means those who traditionally can’t afford larger homes have options. But it can also be good for traditional housing.

When buyers begin to disappear, sellers must change their pricing structure. This means costs of real estate can diminish. While that’s “bad” for the market, it’s “good” for those with enough money to purchase a property outright. You can get some excellent deals, then turn those deals into PIGs, or Passive Income Generators.

Subletting, rental, “AirBnB”; these sorts of solutions will increase in 2020. There may even be some hybrid crossover. Let’s run a brief hypothetical examination of possible expenses associated with home ownership to give you an idea of potential, and what’s driving it. It’s worth considering that the market will likely become “more competitive” in 2020.

A Brief Hypothetical Examination Of Property Profit Potential

This means thinking outside the box. So, the median home listing averaged across the U.S. as of April, 2019, was $226,800. Adding a DIY 3.1 kWh solar array increases property value $10k to $20k depending on state, doubling or quadrupling your value (DIY 3.1 kWH solar will be about $5k and a weekend to two weeks’ installation).

$226,800 just jumped to between $236,800 or $246,800. Now add in a DIY tiny home in the backyard with a gravel driveway, mailbox, and full utility hookup to your existing property. Provided you can do this legally in your area, property value just jumped up to $266,800.

You’ve spent $25k and increased property value $40k, plus a tax break for sustainable energy, and reduced monthly utility bills. You can save easily, $1,200 a year in electricity through solar. In ten years, you’ve saved $12k. Plus, now you can rent out your tiny home property in the backyard. Do a good job and you can rent it for $1k a month.

Now you’re pulling in $13,200 a year where before there was nothing. In 2 years, the cost of solar and a tiny home have been eliminated, and you’re simply profiting at an extra $13.2k annually, while your property value expands. You can sell it without worrying about the closing-cost losses of around $20k, because you’ve already overcome them.

What To Do In 2020

A lot of homeowners are planning for a competitive market by setting their property up to be the most valuable. If you determine for yourself a budget of about $50k, you can refurbish the inside and outside, add a tiny home and solar array, and probably increase property value as much as 33%; depending—then sell. 

When you do finally sell, you can turn that money directly into a new property as a means of avoiding the lion’s share of taxes; this is called a 1031 exchange. You’ll be able to get a better home for less money by year’s end, and even side-step many of the associated taxes—provided you’re savvy.

If you don’t have a property right now, the tactics outlined here can help you become cash-positive. If you build your own tiny home and add solar, do a good job and for $10k to $25k you could have an “off-grid” property that lists at $50k or more. Sell that, and you’ve got an effective downpayment on a much larger home.

Your flexibility in these areas will in large part depend on your region. Some markets are tighter than others. The cheapest is in West Virginia, whereas the priciest are in Hawaii. If your occupation is location-independent, you can choose your market. Not everyone can. Regardless of your region, savvy property management can help you maximize real estate in 2020.

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