HAPPY NEW YEAR!!!
Market Monday is all things focused on Real Estate. Below are my interpretations of various articles across different platforms. I’m gathering the temperature of the Market for you. It’s not too pretty.
Accessory Dwelling Unit (ADU) – The Strategic Investment
It is possible to increase your property value by adding an Accessory Dwelling Unit (ADU), Which provides additional living space, rental income potential, and broader buyer appeal. ADUs cater to multigenerational living and remote work needs and offer flexibility for various uses. Consider collaborating with professional ADU builders to ensure quality construction and compliance with regulations. For example, things to consider are Zoning Laws and permitting, the return on investment due to your location, and Rental Regulations (tenant rights and property management). Also, there is a potential increase in property taxes. While construction costs vary, properties with ADUs can see value increases of 20% to 30%, making them a strategic investment for homeowners looking to enhance their property's market appeal. Contact Achlab for more concept developments.
So, about those Property Taxes – It’s UP
Direct Alert for Maryland residents! We are facing a 20% increase in property tax assessments, marking the seventh consecutive year of rising property values across all counties and Baltimore. Approximately 97% of homes assessed for 2025 saw value increases, primarily due to decreased housing supply. Homeowners can appeal their assessments by providing relevant documentation, and it's advised to consult a real estate expert or tax attorney. Some may qualify for state tax credits through the Homestead Tax Credit, which will be assessed automatically if an appeal is filed. If you are seeking to Appeal, here are a few steps to get you started. Consider visiting the MDAT website; you may need the following: Property Information, Income Statements, Tax Returns, and Comparative Market analyses to start with. Be sure to read all requirements and any deadlines in your local jurisdiction.
United States Housing Shortage – Oh, it’s a big deal
The U.S. faces a shortage approximately of 4 million homes, primarily due to restrictive zoning policies that prioritize single-family homes over affordable multi-unit buildings. We could start to see soon of Reforming these policies which could significantly increase housing supply and affordability. On the Federal level, the Build More Housing Near Transit Act has played a key role in addressing the shortage. 2025 will be a monumental year for major reforms and change; if it becomes stagnant, the housing shortage will worsen, impacting the nation's future. Being an active participant in your local laws and zoning policies by attending public meetings or lobbying for policy changes are a few ways to get started.
Mortgage Rates – Check-In
Mortgage rates have risen for the fourth consecutive week, nearing 7%, with the average rate for a 30-year fixed mortgage now at 6.93%, up from 6.91% last week. This increase is attributed to a strong economy and high home prices, affecting housing affordability and demand. The 15-year fixed mortgage rate also rose slightly to 6.14%. The ongoing lack of entry-level housing supply remains a significant challenge for first-time homebuyers. So, if you are an architect, builder, investor, or developer, now is the time to shift your focus to entry-level housing development. The Market will be in your favor.
REITs vs Private Real Estate – Any Risks?
On the flip side, there are risks associated with investing in Real Estate Investment Trusts (REITs) compared to private real estate. REITs offer liquidity and lower entry barriers but come with higher volatility and less control over assets. Private real estate is seen as a more stable investment with the potential for better returns, though it requires active management. There is risk in every market, so maybe now is the time to diversify your portfolio and assets.
Conclusion
In conclusion, I did say it wasn’t going to be pretty; the real estate landscape is facing a series of challenges. Participation from investors to homeowners will have to lead the charge for Change. So far, the potential of ADUs stands out as a promising strategy for enhancing property values and meeting contemporary living demands. Even though rising property taxes in Maryland signal the urgent need for homeowners to understand their rights and options for assessment appeals. Additionally, housing shortage in the U.S. calls for reform in zoning policies to promote multi-unit developments and address affordability concerns, especially as mortgage rates approach 7%. As we navigate this complex market, staying informed and proactive will be crucial for anyone looking to make sound real estate investments or improvements, so be sure to follow @ACHLAB for the latest developments
Resource Articles:
Article How Building an ADU Can Increase Your Property Value.
Article The US needs another 4 million houses, so here’s how it could get them.
Article Property tax assessments rise in Maryland for 7th straight year - WTOP News
Article Mortgage rates | Fox Business
