The real estate market is usually the recipient of new data and information that sends people into a frenzy on a regular basis. This could be anything from new unemployment data or new housing start numbers. This data comes fast and furious. If you really monitor the market, it can tell a lot about where things are headed. While this may be the case, it could also provide very little information to your specific investing area. National real estate trends can be a sign of things to come, but they may not be relevant to your particular area. Before you overreact to what you hear on the news or read online, you have to know how and if this information really pertains to you.
Do trends and news effect the market or is that data already a thing of the past when it hits the public? The first thing you need to realize is that every investing area is different. What is applicable in metro areas may have no significance in urban America. What happens in certain parts of your town may not even apply to areas 15 miles away. National trends and investing news can give you a big picture look at where the market is headed and what it is doing, but it won’t really tell you what is going on in your area. For that information, you need to delve into the numbers wherever you invest.
Take the big picture data and apply it to your investing area. Look at foreclosures, employment data, new housing starts, home prices, sales volume, crime reports and rent numbers based on where you invest. Some items like interest rates may be national, but for the most part – what is happening in Florida won’t have much of an impact if you are investing in Connecticut. Trends may make their way up North or they may not. If you hear on the news that home prices are on the rise, you shouldn’t overreact and list your home on the market the next day. You still need to look at the comparable sales in your neighborhood and see where they are headed. National data can be important to look at, but only in comparison with your investing area.
Many buyers and sellers may be in touch with what the market is doing, but that doesn’t mean they will be affected by it. If foreclosures are up in January, that doesn’t mean they will be up in March. The main items to look at are unemployment numbers and new housing starts. You can find that information out for your investing area. If unemployment is up, buyers will be reluctant to commit to paying a mortgage for 30 years. If houses are being built, you can assume there is a demand and this will push prices higher.
Data is important in your real estate investment business, but it is only important if you know how to use it. There are always trends and new pieces of information coming and going in the market. The key is to recognize which ones are important to you and where you invest. Some could be critical to making good decisions and others could be window dressing. The best investors know the difference.