Is your real estate market overpriced? Navigating today’s housing market isn’t easy. Though inventory is going up and mortgage rates are going down, property prices are still sky-high. For the real estate investor, it’s pretty easy to assess your local market. Things get tougher as you go further afield.

U.S. housing inventory is trending in the right direction. 

We saw a 12.9% year-over-year increase in new property listings in February. Although total inventory remains flat, we’re finally not seeing a decline in overall inventory for the first time in nine months.

As you’re likely aware, tight inventory is mainly responsible for the stubbornness of the housing market. Even when active demand seemingly froze market activity, prices haven’t budged. Inventory kept rising interest rates from easing home prices. It’s also made the supply and demand balance unsustainable.

Ideally, this increase in new home listings points to a turning point on the horizon. But there are a few problems – and reasons investors shouldn’t sit back and “wait out” low inventory.

For real estate investors, it’s relatively easy to look at all the news coming out about the real estate market and lament. You might feel like there’s no place for you anymore, and investing is too hard. Believe us, that’s not the case! Part of the problem is that many of these reports and analyses look at overall medians and averages. 

While these are concise ways to talk about overall trends in the country, investors need to zoom in. The real estate market is not uniform. It varies, and investors must take advantage of it. We found these maps by ResiClub (courtesy of Fast Company) helpful in illustrating this point.

These maps effectively represent median home prices within individual markets across the country. While the $380,000+ median price sounds scary, we must recognize that that number doesn’t reflect every market.

So, what do these maps tell us about the real estate market…and investing?

So you’re investing in real estate…but are you investing in yourself? Here’s the harsh truth – none of us are naturally adept at building an ideal financial future on our own. For some, financial success comes from parents who instill lessons of self-discipline and the value of a dollar. For others, it comes from personal research, lots of reading, or even degrees and certifications.

No one expects a passive real estate investor to be an absolute expert. You didn’t sign up for a passive gig just for it to turn into a full-time job! 

Sometimes, the best deals you do are the ones you said “no” to.

“How is that possible?” you might ask. We live in a time when the real estate market is competitive and contentious. That’s true for the average buyer, and it’s true for investors. Even now, we sense FOMO – the fear of missing out – plaguing the real estate industry. Potential homebuyers are afraid they won’t win their bid. Investors are worried they’ll miss out on once-in-a-lifetime deals. They think they’re doing something wrong if they’re not participating in the hottest new investment market.

But sometimes, staying out of it is better than jumping in.

Though the factors that sway the rise and fall of the real estate market can be varied and complex, there’s no denying that housing inventory is among the most impactful. As one of the most significant talking points among investors and real estate professionals, we must all understand how inventory impacts what we do – and the industry.

Sometimes you’ll hear us refer to a very simple rule for real estate investors: take nothing on faith. But what does that really mean, and why is it essential to success as a passive real estate investor? 

Essentially, we’re telling investors to do their due diligence, to ask questions, to verify, and to absolutely look a gift horse in the mouth. We’ve all heard what they say about making assumptions!

One of the arguments critics like to use against real estate investment is its lack of liquidity. To access cash, you must endure the rigamarole of selling the property. As any seller knows, this process can be one long headache. 

Fortunately, having cash in hand isn’t the only way to reap the rewards of your property’s equity. Investors should know all of their available options. We’re not necessarily recommending these strategies. They each come with unique benefits and drawbacks, and we urge individuals to do their due diligence.

Passive and active real estate investing are two distinct approaches to this business, each with advantages, drawbacks, and considerations. The strategy you choose often comes down to personal financial goals and preferences, but there’s no denying that passive investing offers a few distinct advantages for all investors.

Committing to a huge financial decision is never easy. It’s a process of back-and-forth, pros and cons, self-doubt, and infinite, exciting potential. For many, this is the decision to make a significant investment. We all know how critical due diligence is, including asking serious questions!