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Tuesday, March 25, 2014

Understanding real estate market trends

The last decade has seen turbulence in the real estate market, so it's understandable that some investors would be shy of entering the housing market. That being said, all signs show that the market is slowly improving, so it's important to try and understand the real estate market so as to position yourself for optimal investment and purchase decisions. Read on for some things to keep in mind when entering the residential property market.

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Location, Location, Location

If you've ever been around anyone with experience buying or selling a home, you will no doubt have heard that location is everything. It's the reason why condos in Midtown Manhattan cost more than family homes in the suburbs of Salt Lake City, Utah, for example. In order to consistently make money in real estate it's vitally important to understand the location and history of a property. This includes public transportation in the area, access to freeways, proximity to schools, property taxes in the area and similar factors.

Prices and future infrastructure

Another important piece of information to make note of is the housing price trends in an area. If you can gain access to the Multiple Listing Service (MLS), either on your own or through a realtor, then it would be wise to check the sales history of the area. Check past prices and how they relate to current prices; are prices increasing quickly or is it a gradual increase? Are housing prices in the area on an upswing but still horribly depressed from past highs? All of this trending information gives clues to the potential future of a specific location.

Future infrastructure developments also have a significant impact on residential properties in the area. Is the city planning a new mall or some urban development? Scour the internet and local papers when you're checking out a property, as these plans are often in the works for many years before a shovel ever strikes the dirt. If you're really into getting your hands dirty, check with the local political office or the local environmental agencies for things like Environmental Impact Assessments (EIA), which require companies to lay out plans completely to government officials to ensure the proposed plan isn't too disruptive to the local environment.
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The children are our future

School rankings in the area can often increase real estate values as families attempt to move closer to a good education for their children. If you have kids who are already in school or who will be in school soon, or if you're just looking for a good neighborhood to settle down and start a family, picking a house near a good school will help make sure that your home appreciates in value over time.

The overall economy

Applying macroeconomic theory specifically to real estate is a risky business because markets tend to be so localized. Even though the majority of news about the housing market during the "great recession" was negative, there will still markets that managed to make money over that period. The majority of bad news in the housing market came from places like Las Vegas and Northern California, where properties were hugely oversold and lending standards were basically non-existent.

The bottom line

Do your homework! Make sure to keep all the factors above in mind when you're hunting for investment properties, and if you have further questions don't be afraid to reach out to an expert. Nobody has a crystal ball; but studying the location where you want to purchase will drastically increase your odds of making a good housing investment. 

This article was written by Richard Craft, a regular contributor here at Moneycation. He writes this on behalf of Focused Finances, LLC., your number one choice when looking for help with estate planning in California. Check out their website today and see how they can help you!