Is a Chanel Handbag a Better Investment than Property?

Could a Chanel handbag really be a better investment than property?

According to a new study, the value of the classic Chanel tote has gone up by 70%. It’s one of a few fashion items that has exponentially increased in value since hitting the market back in 1955 when it retailed for just under $230. Its value now? A hefty $4,900.

While you likely know someone who would love to have that Chanel bag, the property investor in you sees opportunity knocking in real estate in the coming year.

In an opinion piece by Jeff Reeves on MarketWatch, he writes, “if you’re an investor, there has never been a better time in history to get into real estate.”

While some fear another housing crisis and can’t shake the scars of the Great Recession, Reeves rejects speculation that we are in the middle of another housing bubble. He points to continued signs of strength and advises property investors to not let the past color their perceptions.

Housing Market to Continue Upward Swing in 2017

If mortgage rates continue to remain relatively low and job growth continues, as most forecasters expect, then home purchases are likely to rise in the coming year,” says Frank Nothaft, chief economist for CoreLogic.

Home prices nationwide, including distressed sales, increased year over year by 6 percent in July 2016 compared with July 2015, according to the CoreLogic HPI. The forecast also predicts home prices will increase by 5.4 percent on a year-over-year basis from July 2016 to July 2017.

The structural issues that led to the housing collapse last decade just aren't present, according to a Bloomberg Market report.

The bubble burst in 2005 was a result of too many homes and poor credit. The exact opposite is happening now with high demand in housing, low mortgage rates, and a sound economic situation.

While Nela Richardson, chief economist for Redfin, doesn’t reject good housing conditions, she expects 2017 to bring a more normalized housing market. Her indicators show a healthy number of sales but a moderate rate of price growth.

According to a recent survey of Redfin agents, 54% predict prices will rise somewhat next year and 36% predict prices will level of,” Richardson says in The Mortgage Reports.

Who’s Buying in Real Estate in 2017?

Next year, more than half of all homes will be bought by first-time home buyers, according to a survey by Realtor.com.

The survey found 52% of buyers with their eye on a home purchase next year will be first-timers, and 61% of those are under age 35.

What does this mean for property investors? Expect competition in the suburbs and in starter homes. Rentals may also be a hot item for those millennials who don’t win a bid on a home.

Is a Rental Investment Where It’s At in 2017?

A lack of housing and the booming job market is causing demand for rental housing, reports show. In some major urban areas, the demand for rental properties is skyrocketing, with investors seeing ROI of 30% or more on rental income property.

The Emerging Trends in Real Estate 2017 report notes that apartments have had a long run of success that is expected to continue. A number of factors account for the enduring strength of the apartment sector, including:

  • Entry into the job market of the massive millennial generation, who are a prime age cohort for rentals.
  • Consumers’ wariness of for-sale housing product following its massive loss in value during the housing market crash of 2008.
  • General consumer preference to remain flexible in their lifestyles.
  • Increased demand from baby boomers looking to downsize.

In Houston, the real estate market has dealt with a period of uncertainty due to recovery in the energy industry. However, it did not falter like some had initially predicted. Even with 2016 being an election year that could cause jitters in the market, the Houston market remained steady.

In fact, Houston made the 2016 list for Top 10 Hottest Real Estate Markets for Investors. Investors in Houston saw a total return of 15.63% despite the uncertainty in the energy industry.

Should You Invest in Chanel over Property?

You may make a quick buck on the bag, but it won’t provide you the continual opportunity that comes with property investing.

In fact, here in the U.S., we have the most property tycoons of any nation with 44 billionaires, according to Forbes Billionaire List for 2016.

Who is the richest real estate tycoon in the U.S.?

It’s Donald Bren. He has a diverse 110-million-square-foot portfolio in Southern California. His Irvine Company owns and manages more than 500 office buildings, more than 40 shopping centers, 50,000 apartments, three hotels and several golf clubs and marinas. He also has new developments in Silicon Valley and Manhattan.

What about Donald Trump? Our President-Elect and popular real estate mogul placed 36th on Forbes list in 2016. However, I’m sure we’ll hear lots more about his properties, investments and wealth come tax season 2017.

At Catalyst Funding, we are a hard money lender for real estate investors in the Houston, Texas, area. We specialize in hard money rehab loans and help investors leverage their capital to acquire and rehab properties for investment purposes.

Whether you are looking to do a complete remodel, convert to a rental property, or simply clean up a property and put it on the market, we can help you secure the financing you need for your next project.  Contact Catalyst Funding today.

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