Real Estate Market Analysis

Sales trends and rental trends are good indicators of rising or falling income property prices. rnrnIt would be a good idea, therefore, to create a system for tracking and recording trend data such as the number of listings, new housing starts, selling prices, time on market, rent levels, and vacancy rates when you start investing in real estate. rnrnYou might be surprised. As you watch these sales and rental trends, you will be able to detect fluctuations in the market as they occur and might make a profitable short-term gain. rnrnSales TrendsrnrnWatch for the time properties sit unsold on the market. In slow markets, properties can sit unsold for months, and the result could mean price decreases. Likewise, as the average time on the market falls, say, from 270 days to 180 days to 120 days, prices are about to go up. rnrnWatch for the number of properties for sale. Real estate prices fluctuate as a result of supply and demand. As the number of “for sale” properties increases, thereby inventory increases, which could mean that sellers will drop their prices to attract buyers. Similarly, a minimal number of “for sale” properties signal a shrinking inventory and points the way to what could be rapid advances in property prices. rnrnRental Market TrendsrnrnWatch for and review these four important rental market trends for the past ,say, 1 to 2 years: rnrn(1) vacancy rates rn(2) time on market rn(3) annual rent increases and rental concessionrnrnOkay, now ask yourself. Are vacancy rates falling or increasing? How long does it take to fill vacant apartments or rental houses? What types of units rent the quickest, i.e., what is the configuration and size of the units? How do vacancy rates differ among various neighborhoods and communities? Do some types of buildings or units have waiting lists? If so, what are their features and locations? rnrnWhat about rents, are they steady or increasing? What about rent concessions, are property owners giving concessions to attract tenants, and if so, what are the concessions? rnrnWatch for foreclosures. Homeowners who lose their homes become renters, in turn causing a shortage of rentable units that results in higher rents; thus, higher rental property prices. rnrnWhat about interest rates, keep in mind that low interest rates means that some tenants might purchase a home and vacate the rentals, and vice versa. Of course, in our current economy, with lenders tightening their loan qualifications, this rise and fall in interest rates might be less suggestive. Nonetheless, interest rates should be monitored. rnrnIt’s a smart real estate investing procedure to watch and record real estate sales and rental trends. Whether you’re a rental property investor or current owner, understanding how sales and rental trends affect income property prices and then making yourself ready to react quickly can mean you score big gains. rnrnHere’s to your real estate investing success. XXBR2