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Many people tend to get caught up in real estate trends reported in magazines, newspapers and on television. This is not a wise idea.
With the advent of the Internet, you can learn just about anything on a particular subject. While access to information is usually a positive development, things can conversely get a bit crazy if you get overloaded with it. Look long enough and you can find two pieces of information offering exactly the opposite views on a subject. Obviously, that doesn’t really help you make a choice.
In real estate, the information offered in the media is usually uniform. For the last six or seven years, everyone with any brains at all has reported the real estate market has been hot. Now, some of these same pundits are suggesting the market is cooling off. Some are even predicting a crash in the market.
As a potential buyer or seller, how should you carefully evaluate the information you receive in the media? The simple answer is you should ignore it. The problem with these reports is not the accuracy. Instead, the problem is they are reporting national trends in real estate.
National trends are great and all, but they have little or no application to your specific area. Real estate consists of a series of smaller regional markets – some doing exceptionally well, others declining. It is difficult to make all markets fit into a :national trend.” Consider the following if you do not believe me. The real estate market for the last few years has been reported as hot, hot, hot. In Colorado, however, the market has been flat throughout this time. If you were considering buying or selling in Colorado, the information being provided for national trends simply did not apply to you.
If you think Colorado is the exception, it is not. The state with one of the worst appreciation rates over the last four or five years, for instance, has been Texas. Put in practical terms, this means real estate in Austin, Dallas, Houston, Denver, and San Antonio have not followed national trends, which is crazy because those areas have been some of the hottest in the country. The only real estate trends that really matter are those in your local markets — not the national data.
If you are considering buying, you have to be very careful when considering real estate trends. If it looks like a seller’s market in your area, you may make the mistake of not buying. Even in a seller’s market, however, buying a home is often better than renting. Every day you are in the home is a day you are growing your personal wealth through equity accumulation. Don’t stay out of the market simply because you feel it isn’t the right time. Carefully weigh all the factors – population growth, jobs, unemployment, development and local economies,
It is easy to get caught up in real estate trends since they are plastered in front of your face on a daily basis. In truth, they really should not play much of a role in your decision making process as an investor — study the individual regional markets first.
Bill Manassero is the founder/top dog at “The Old Dawg’s REI Network,” a blog, newsletter, and podcast for seniors and retirees, that teaches the art of real estate investing. His personal real estate investing goal, which will be chronicled at olddawgsreinetwork.com, is to own/control 1,000 units/doors in the next 6 years. Prior to that, Bill and his family lived in Haiti for 11 years as missionaries serving orphaned, abandoned and at-risk children.
