Reading The Housing Market

Housing markets are always on the move and keeping up with them can be a full time job. Even if you cannot devote all of your time to studying real estate market trends, you need to understand where things are going in order to be a successful real estate investor. Big events create big change, which can lead to the opportunity for big profits or substantial losses. Which side of the equation you are on will depend on how well you understand and predict the markets.

Real estate market analysis is key, and the first step is defining your market. You can do this by city, zip code, or even housing development. This will help you to narrow your analyses to specific markets. Once you have defined your market, you need to then define your variables for analyses. Such variables include:

• The assessed value of a property

• Square footage

• Number of bedrooms

• Number of bathrooms

• Number of garage bays

• Age of the property

• School district

• Crime statistics

• External style

By using these variables to find homes of similar characteristics, you can look into historical real estate market trends and plot out the sales prices over time. Are prices going up, down or staying the same? What is the average price? What were the average days on the market until sale?

Other things to think about when analyzing real estate market trends are the number of offers received on houses for sale. Ask a realtor for this information. This will tell you a lot about how interested people are in moving into the area, or the demand in the market. If it looks like the market is heading upward, you can start looking for a real estate deal under market value.

Additionally, when trying to predict housing market trends, don’t get hung up on trends that are interesting, but not relevant to you. For example, if you are looking to flip a house in southeastern Pennsylvania, don’t spend a lot of time reading and analyzing what is going on in Pennsylvania as a whole. It is a large and diverse state, and what is happening in Central or Western Pa. is not necessarily relevant to what is happening in the Philadelphia area.

By using all of the information available, you can develop a trend of where prices are heading and how long it should take to sell an average property. You can then enter the date for any property that meets the criteria and determine if you have an opportunity to make a profit.

To learn more on this topic, visit our Flipping 101 section on how to identify the best real estate investment markets.