Wise real estate investors we are always on the lookout for great new “emerging markets” where all market factors point toward strong appreciation and growing rental demand. Buying rental properties in the earliest stages of the market cycle result in quicker, high-yielding returns over time. In this episode, Bill shares little-known information about some new primary and secondary markets that have all the right stuff to potentially take off in 2018.
Disclaimer: The information presented here today came from HousingAlerts.com founder Ken Wade, Harvard MBA, CPA, and successful real estate investor, who has been studying emerging markets in the U.S. for many years. Please note: We do not necessarily endorse nor agree with Mr. Wade’s findings. We are, however, presenting this information as yet another source for market data that you might want tp investigate and test yourself as part of your ongoing real estate research efforts.
Why? Because every local real estate market in the US moves according to its own unique rhythms and cycles. Sure, some big economic trends (like the 2008 Crash) have a broad impact, but they affect every market DIFFERENTLY.
(Did you know there were dozens of markets that actually went UP in the middle of the 2008-2010 crash and dozens more that actually DECLINED during the peak 2005-2007 boom years?)
There are two ways to analyze any market; by its ‘Fundamental’ attributes or by its ‘Technical’ charts.
With the advent of personal computing and the internet, the Technical Charts method or “TA” as it’s called has become the dominant methodology for predicting stock, bond, commodity and currency market cycles worldwide.
TA is used by ALL major investment banks and international trading desks as the underlying basis for TRILLIONS of dollars in DAILY investment transactions.
TA is visual, relying on Supply and Demand charts because these charts also track the most important and most elusive driver of future price trends: Market Psychology.
Until 2006 (when Ken Wade’s HousingAlerts.com first became publically available), the data and tools for implementing TA for LOCAL real estate markets simply did not exist.
Before TA (and HousingAlerts.com) real estate investors had to rely on old, outdated and inaccurate Fundamental Analysis (FA) because there was no alternative.
There are hundreds of Fundamental Analysis (FA) factors that may (or may NOT) impact real estate prices for any given market during any particular time period. Some of the popular FA factors include Population, Mortgage Rate, Unemployment and Income levels.
Less traditional FA factors may include Climate, Vacancy, Building Permits and even Gasoline prices.
Historically, these and many other FA factors were once thought to be drivers of real estate prices. One only need look at the Texas real estate market for proof that Population isn’t a good predictor of real estate values. For the two decades preceding 2010, Texas had some of the largest population gains (both percentage and total) but experienced relatively dismal real estate appreciation.
Mortgage Rates were once considered the PRIMARY driver of real estate and the best predictor of future prices. That FA theory was also shattered when mortgage rates fell to historical lows simultaneous with the last down cycle (crash).
Charts showing the annual appreciation or decline in real estate values over time are visual snapshots of Supply & Demand forces in action. Technical Analysis (TA) relies on these charts because they accurately reflect what ACTUALLY happened.
ANY and ALL Fundamental factors that can and did influence real estate values in THAT market, for THAT time period are ALREADY reflected in the chart. Other Fundamental factors that did not influence prices in THAT market for THAT time period are, by definition, excluded.
The practice of TA consists of what are called “Studies” – different sets of calculations and algorithms proven over time. These Studies include Market Psychology, the most powerful driver of all.
Because real estate is so cyclical (compared to the Stock Market, for example), relatively simple Studies can be used to accurately track local markets.
Using these charts and Studies, HousingAlerts.com deciphers the data into two broad categories:
1) Market Momentum (the Six Trigger Alert Report or ‘STAR’)
2) TA Point Score (TAPS)
Here is the summary of Mr. Wade’s recent findings:
TOP EMERGING STATES
TOP EMERGING LOCAL MARKETS
Examine the information presented here and on his website for yourself. Again, we do not necessarily agree with the projections being made above. Use your own good judgement and discernment regarding this data.
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