Real Estate Regional USA
What Can Impact Your Local Market
Oct 18, 2005, 19:10

Your local market plays an important role in what properties are the best investments. While you should always be looking at prices of property in your local market, you must also consider what kind of property is selling well. You may have your eye on a million dollar home that will net you a significant return when it sells. But if there are few homes of this caliber actually being bought in the local market, you have to ask yourself whether you can tie up this kind of money long term.

On the other hand, if there are lots of $100,000 homes changing hands in your local market, you may be much better off to invest in several houses in this price range.

And it’s not just because of the amount of the initial investment. If you do your research, you may find that $100,000 homers are selling much faster than homes in the $40,000 - $50,000 price range. People tend to buy at the upper end of what they can afford – true of any local market.

Your local market is likely going to reflect the local economy. For that reason, your local market research shouldn’t start and stop with what kind of property is “hot.” Keep an eye and ear to local news. Are there major employers who are talking about expanding or cutting back? Actions like that will have a major impact on the local market and real estate trends.

If you’re considering property to offer for rent, you’ll find that the houses that sell quickly in your local market are probably in the price range of what’s also being rented most often. Even if you are planning to rent the property instead of offering it up for sale, your research of the local market will likely help you make good decisions.

While economic conditions likely play the biggest role in the local market, don’t overlook the impact that social norms have. If the majority of people in a particular neighborhood approve of mobile homes as housing, mobile homes are likely a good investment. This is arguably much less important as people are more mobile, but social standards do still have a role in the local market.

Another very important (and often overlooked) factor in the local market is the history of the property itself. If there was a murder that occurred in a particular house, the local market trends may not apply at all. Those who remember the event will be more likely to shy away from that particular property. While you’ll likely still be able to rent or sell the house, the number of people who know of a negative history will limit the number of potential buyers or renters.

By the same token, a house with a positive past may very well bring a premium price on a local market. If someone famous lived (or visited) there, there may be an increased demand for the property which will raise the price.

There’s no doubt that many factors play into the local market demand for a particular piece of property. Taking time to consider the potential impact of details such as the property’s history and the area’s economy will help you make more informed decisions, earning a better return on your investment.

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