9:46 AM Jul 15, 2022
“Some investors are buying smart. We have a lot of people, let’s say they used to buy pre-construction condos here and there. In this market, they want to buy something where they can hedge their risk,” he says, such as properties with good conversion potential, or where one unit can be turned into two.
“There’s a good 50% of buyers, investors, whatever, that regardless of what we tell them, even despite them having access to money, they’re still trigger shy because of the big unknown — how long is this going to go, how long are prices going to go down,” he says., says today’s interest rate environment resembles that of the late 2010s — and for that reason, he’s seeing the return of late aughts investor tactics as some look beyond real estate for the greatest returns.
Savvy pivots aside, today’s rising rates do signal pain for some borrowers. A key issue, Sraidarian points out, is that many with variable rates with static monthly payments are teetering closer to their “trigger rate”: the point where their payments will no longer cover even the interest on their loans, and will materially rise.