They say trading with the trend is trading with the flow. But in today’s world when we see a brand new trend unfolding now and then; is it wise to follow every trend? Since real estate is such a volatile market, can you afford to join every trend? And if you are not following the trend are you losing something?
Well, there is no definite answer to all the above questions. But when it comes to market trend in your area, the key is to determine the trends that are going to prevail. We will help you determine which market trend are useless and which ones are long-lasting.
Identifying and Measuring the Forces that Impact Real Estate Value
There are certain influences that drive the real estate market. They are property value include social, economic, physical/environmental and governmental forces. These are the factors that dictate trend.
When the interest rates on mortgage begin to fall, more individuals desire to be home owners. When income tax rates increase the demand for starter housing in communities decreases.
A fluctuation in these influencing forces is what creates a market trend. Monitoring these forces and thinking ahead can help determine the trends. You can pinpoint the ones that are worth following. Get to know the market indicators. You will be much better equipped to predict, and respond to the market developments.
Measuring the Market Reactions
The influencing forces that cause the real estate market to fluctuate often interact. An appraiser gauges the market’s reaction to determine the effectiveness of a trend.
There are several ways to measure the market’s reaction. Note the monthly statistics related to housing starts. Check building permits. New home sales can get you a good reading on the level of activity in the housing market. Research the latest housing reports. You can figure out whether a trend is effective.
Knowing Home Buyer’s Point of View
Like any other market, knowing your consumer’s reaction to the market can give you the most insights. What people buy can give you valuable information about the market. Customer feedback is essential. A potential buyer’s interests is one of the easiest ways to understand the home buyer’s point of view.
The key here is to pay attention to those things that are working and those that aren’t? Listen to your potential home buyer’s comments and thoughts on what works in a home and what doesn’t.
Identifying What’s Selling
Trends aren’t always what sellers are doing. What matters most is what the buyers are actually buying. Start looking at homes that are being sold or purchased in a 5 to 10 mi.² radius of your area. You can also look at the past listings within a 1- 3 mile radius from yours. For a comparative market analysis, you can compare the last 20 homes sold to see what all those homes had in common. Make the analysis on pre-defined parameters to identify what’s selling and why.
There are many trends and fads in today’s world in general. There’s always something brand-new when it comes to the real estate market as well. To stay ahead of the game, it’s best to determine which trends are effective and which ones will fade away in no time.