Is
the Market Up or Down?
 We’ve
all heard rumors about the hot housing market cooling
off. But is it true for your area? A recent Realty Times
article gives you 10 ways to tell.
Generally, the past year saw a slowdown
in many real estate markets. But, the slowdown never
materialized for some areas. Some areas even experienced
price increases. Data compiled by the National Association
of Realtors for 149 metro areas revealed that 71 areas
experienced price gains, 73 had declines and five stayed
the same in the fourth quarter. The localization of
real estate is apparent when you look at individual
areas. For instance, the Atlantic City and Salt Lake
City metro areas saw annual gains above 20%, while prices
in Florida’s Sarasota-Bradenton-Venice area saw
an 18% drop, a 17% drop in Florida’s Palm Bay-Melbourne-Titusville
area and an 11.7% drop in Florida’s Cape Coral-Ft.
Myers area.
As a homebuyer or seller, what are you
to do? How do you tell if your local market is up, down
or stable? There are several clues that will usually
tip you off. When evaluating your local market, think
about these issues:
1. Population. If the local population
is growing, there will be more demand both for owner-occupied
homes and rentals. You can check with your local economic
development office for more information.
2. Prices. There are local brokers who produce customized
pricing data for HOAs, neighborhoods and communities,
and their data is often available through broker newsletters
and from online localized market reports.
3. New Home Starts. Although your area may be experiencing
a population increase, and thus, demand, more new homes
create supply. You can check with a local home builder’s
association or the economic development office and inquire
about construction permits and starts.
4. Days on the Market. Always an important indicator
of a market is how many days a house for sale sits on
the market before selling. You can speak to a local
broker about an average time to sell, but be sure to
compare like times of year, spring with spring or summer
with summer.
5. More Specific Data. When looking at general statistics,
you have to remember that numbers like broad market
trends may include both condos and fee-simple properties.
It may be the case that the condo market is cool in
your area, but the overall market is doing well, or
vice versa. Local brokers will be able to help you with
specifics.
6. The Real Price. When looking at recorded sales prices,
you may not be getting the whole picture. If a home
sells for $600,000, but the owner paid a 3% “seller
contribution,” then the real sale price is less
than what the records will show. Again, speak with a
local broker who has actually negotiated prices and
terms.
7. Interest Rates. Often a simpler gauge of the market,
lower interest rates are good for real estate and higher
interest rates constrict demand and reduce sales. Today’s
rates are lower than those seen in past decades but
higher than those seen in the past few years.
8. Jobs. Almost everyone finances the home they purchase,
and this means they need a job to pay the mortgage.
If local employment is on the rise, it is a good sign
for real estate. If local employment drops, look for
fewer sales and lower prices.
9. The Local Newspaper. Read the local paper for coverage
that might impact real estate, such as new malls, schools,
factories, roads or public transportation. Also look
for building permits. These things all suggest the direction
of real estate in the area.
10. Dump the Data. Although statistics are valuable
to look at, much real estate demand cannot be quantified.
It may be better to have some conversations with those
“in the know,” such as neighbors or friends
in a neighborhood and local brokers and lenders. Try
to find a good variety of people to talk to so you can
get the best picture.
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