How well do you know your local real estate market? The answer to that question will have a lot to do with whether real estate investing provides a lucrative future for you and your family or rueful memories of what might have been. By knowing your local real estate investing market, you're able to keep your finger on the pulse of your local community and to stay abreast of changes in trends, sales prices, and rental rates. Knowing immediately about these changes is critical to your investing future.
DEMOGRAPHICS
Demographics are the data that describes the composition of a population, such as age, race, gender, income, migration patterns, and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced and what types of properties are in demand. Significant shifts in a nation's demographics can have an enormous impact on real estate trends for several decades.
INTEREST RATES
Interest rates also have a significant impact on the real estate markets. If you're considering buying a home with a mortgage, it is beneficial to research interest rates using a mortgage calculator. Changes in interest rates can significantly influence a person's ability to purchase a residential property. Because the lower interest rates go, the lower the cost to obtain a mortgage to buy a home will be, which creates a higher demand for real estate, which again pushes prices up.
ECONOMY
Another critical factor that affects the value of the real estate is the overall health of the economy. This is generally measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods, etc. Broadly speaking, when the economy is sluggish, so is real estate. However, the cyclicality of the economy can have varying effects on different types of real estate.
GOVERNMENT POLICIES OR SUBSIDIES
The legislation is also another factor that can have a sizable impact on property demand and prices. Tax credits, deductions, and subsidies are ways the government can temporarily boost demand for real estate for as long as they are in place. Being aware of current government incentives can help you determine supply and demand changes and identify potentially false trends.
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