How to get a Better Read on the real Estate market
For many, making money in real estate is determined when you buy. If you pay too much for something, you won’t get a return, and conversely, if you get a great deal, you’ll be able to make a giant profit. But how do you get great deals each time
Well, remember that no two places are the same, especially in real estate. While some might be generic about the housing market in the US, the fact that there are no two areas with the exact values. Sure, it can have a broad understanding of it, but you can’t assume that every place is the same.
First thing you’ll want to look at is the case-shiller price index, which includes the national home price index, the index for a 20-city composite, a 10-city one, and 20 individual metro areas. This will tell you about the general index of this, and the data points that are calculated from as far back as 1987, to as recent as today.
Then there is transactional value, where inventory is always moving in a healthy market. You can look at the health of the area by looking at the transactional volume of the homes over the last month or two.
Then there is the average price of the market, which is the average time on market for listings. You can look to see if homes are sitting there for a few hours, or for months on end. If the properties are selling fast, that tells you of the demand. The longer it sits, the less demand, and prices will be lower.
Then there is the asking price, which will tell you a lot about the specific market that you’re studying, if you look at the past pricing trends. You should know about the current price trends of the area at the time of the sale, and from there, take this knowledge and then look at the price trends of the past. This in turn will allow you to look at the expansion and growth of the market in the recent decades, and it will allow you to make an accurate representation and the forecast of the future as well. If the asking price is constantly lowered, then it will show that the demand is less, but if the asking price is high and the turn time is fat, then that shows it’s a high demand for the area. Also, keep in mind the current market and inflation as well, since often, this can be a huge factor in the way it looks when you’re studying this sort of thing.
Finally, it’s obvious that you need some common sense with this. Trust your gut, and look at the numbers, but also look at the no-brainer options for this. There are certain aspects that the data can’t just account for, such as the pending growth and decline of something. For example, if you know that a company is going to build a huge factory over the next three years that will employ more and more people, this is an obvious sign that the real estate will be way less, and in turn, it will be much more valuable. If you’re in an area where tourism is starting to boom as well, you’ll start to notice that you’ll have higher valued homes since a lot of employees need to move there. On the flip side, if there is a chance that something will shut down in the next three or so years, it will cause an adverse impact on the housing market.
With all of these, the key factor here is to make sure that you gather all of the information that you can. A real estate investor that knows what they’re doing will never buy a piece of property without gathering as much information as they can. If you look at the different real estate markets, you should make sure that you’re filtering everything through these factors that are listed here. Before you buy, you need to do research, and while this can be rough, it will be much more remunerative in the long run for you.