Real Estate

Is Your Local Real Estate Market Heating Up? Five Signs To Watch For

Timing is remarkably important in the real estate industry. Whether you’re buying or selling, it’s crucial to pay attention to the current trends in your local real estate market so you can strike the best deal possible. After all, depending on how the market is trending, acting sooner or waiting it out a few months could make all the difference in how much you earn (or save).

To find out more, we asked a panel of Forbes Real Estate Council members how they can tell if a particular market is heating up. Here are a few key signs they look for when making their assessment.

Members share a few things to look for when considering a local market’s trends.

Photos courtesy of the individual members.

1. Dropping Inventory

Real estate prices are directly correlated to supply and demand. When I see inventory dropping, I know prices are going to be driven up, as well as competition. – Mark Brace, Brace Homes

2. Low Unemployment And High Rent Growth

We look at markets on a national level and determine which areas we recommend our clients target based on factors such as supply, occupancy and rent growth. For example, we are much more bullish on markets where unemployment is low, occupancy consistently trends 93% and higher, and there is solid year-over-year rent growth that isn’t impacted by current or projected supply. This scenario used to be more exclusive to urban markets; however, we are now seeing similar trends in adjacent suburban markets. – Shae Shults, Pegasus Residential

3. Government Regulations

We are evaluating properties in our local market every day, so we have a strong pulse on the increasing or decreasing values. A few of the micro factors we look for include price, days on market and number of active units. The macro factors we look for include government regulations like rent control, city inspection requirements, zoning restrictions and accessory dwelling units. Another macro factor that affects neighborhoods in California is the Federal Reserve raising interest rates, which directly hurts the affordability of buyers in most of these neighborhoods. - Donald Bake, New Western Acquisitions

4. Population Trends

If there are a lot of people moving into a town and the inventory is low, the prices are going to go up. If there is a lot of inventory, things should be moving quickly, but prices may not be increasing as rapidly. – Randal McLeaird, SA House Buyers

Read more in How Home Affordability Trends Impact The Rental Housing Market

5. The Energy Of The Community

Look for the energy within the community and the look or feel of the market (e.g. is there locally curated and well-done art on the sides of buildings). The numbers and economic growth tell the story on paper. What can’t be told on paper or through data is the energy and people within a community. - Alexander Allison, D. Alexander

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