It can be hard to tell whether or not the moment is right to make a hefty real estate investment in your local market. When thinking of buying a property, you need to be able to see through the hype and analyze the market with a clear head to get the best eventual return on your investment. Here are some of the ways you can evaluate your market and see whether or not this is the best time to invest.
Do the research
Forbes suggests doing a thorough evaluation of your local market by analyzing the prices of homes for sale in the area, checking how long homes typically stay on the market and seeing who the top employers are in the area. Is this a market that looks like it will be able to sustain growth? Are the homes newly renovated? A quick internet search isn’t a bad place to start, but also consider open houses and researching local real estate agents and brokers.
Know where to find your info
It’s very easy to find accurate real estate market information on the web, just as long as you know where to look. Helpful sources of information include the Federal Housing Financing Agency website, which has a comprehensive bank of data on recently concluded sales in your market. If you’d like to look at active listings, try following them on a site like Zillow.
Is there population growth?
According to Roofstock, one of the best ways to determine whether or not a market is on the upswing is to study population growth. Is the market growing? This is a clear indicator that buying property may be a sound investment? Also, look at the construction starts. If more homes are being built to satisfy demand, then the area is likely primed for serious growth.
Another figure you may want to keep an eye on are foreclosure statistics in the area you want to buy in. Low rates mean the market is healthy, but high rates can spell trouble. Websites such as RealtyTrac are a good resource.
Compare home prices to salaries
Forbes warns against investing in an area where home prices are rising quicker than salaries, as this is a good sign that your market may be on a bubble. Mean income and employment levels are two things that should be compared to home prices. When residents have to stretch their budgets too far to keep up with payments, foreclosures are more likely.