Should you invest in real estate in a low interest rate environment?

Abhi Golhar
5 min readJul 30, 2021

Are you considering investing in real estate?

Do you question whether you should take advantage of the low interest rates that are expected to rise? If so, there are many different factors to consider before deciding if this is the right time for you to invest in the real estate market.

The low supply of homes for sale and available for rent has driven demand through the roof this last year for the real estate market. There have been bidding wars for homes as soon as they hit the market. Offers are pouring in, adding cash over the asking price to beat the competition and seal the deal. This has created a sellers market. Currently, there is a huge trend of families selling their homes, cashing out their equities, and without rentals available, they are buying trailers and motorhomes to live in, waiting for the market to drop to buy another home.

Herein lies a unique situation, a catch-22…

After the sale of a house, the seller has two years to reinvest their earnings without having to pay capital gains tax, which can be upward of 30%. This is a relatively small window to play the market, and with such a huge wave of people jumping on this bandwagon, waiting for the ball to drop before they bounce on the opportunity to bring their equity back into the market, a feeding frenzy of potential buyers may very well possibly flood the market with buyers to keep demand high and prevent prices from dropping. This is a trend that may influence the future market and question whether prices will drop in the near future.

As homeowners have decided to sell and the market has begun to stabilize, we are seeing the bidding wars come down each month, which should continue to drive down the prices of homes. The beginning of summer usually spikes as well, as this is a convenient time for families to move, in between school years and without the distraction of the holidays. As we approach the end of the summer, prices tend to drop, as we are slowly beginning to see now. People who chose to relocate due to Covid have already taken the plunge. The dust is settling and the prices of homes have reached their spike.

With the demand for homes and rentals still high, there is debate as to how much the housing…