Understanding the Real Estate Landscape: What You Need to Know Before Buying

Probably no other investment is as significant as buying a home. As Dov Hertz, the founder of real estate development company Hertz Investment Group, concisely summarizes, “A real estate transaction is like walking through a minefield. Those who are successful are able to sidestep and pivot when necessary. Those who don’t end up stepping on the mine and blowing it up.” Navigating such an intricate maze requires knowledge of real estate market trends.

Understanding market trends is essential for making informed decisions regarding property purchases. These trends can influence property prices, the types of properties available, and long-term investment potential. Here’s a guide to key real estate market trends to consider before making your purchase.

Analyze Historical Data

Historical data is invaluable for assessing market performance over time. Examine trends in home prices, sales volume, and inventory levels over recent years. This analysis can help identify patterns and forecast future market conditions. Websites like Zillow and Realtor.com, along with local real estate associations, can provide this data.

Understand Supply and Demand

The basic principle of supply and demand forms a strong driver of real estate markets. The higher the demand than the supply, the higher the prices will be, resulting in a seller’s market. On the other hand, where the properties being sold outnumber buyers, prices will be lower, indicating a buyer’s market. It can then be used to predict fluctuation or dynamics in price in your area.

Track interest rates

“Interest rates significantly impact the affordability of mortgages and the overall real estate market,” says Dov Hertz. Lower interest rates mean cheaper borrowing; this spurs more buyer affordability and drives up prices. At higher interest rates, affordability declines and can depress home prices. Pay attention to announcements by the Federal Reserve and to overall economic forecasting in interest rate changes.

Review Economic Indicators

Other economic indicators include jobs and expansion in GDP, as well as consumer confidence. A healthy economy tends to stimulate housing demand because people find jobs and are able to keep a stable checkbook. A recession can deflate the value of real estate and lower demand. Focus on local indicators since they can be quite different from larger trends.

Observe Seasonal Trends:

Some real estate markets will be seasonal; for instance, higher listings in spring and summer months when there may be increased demand from the buyer’s perspective-meaning higher prices-whereas come fall and winter, reduced competition may mean buying at lower prices. Timing your purchase with knowledge of seasonal fluctuations can work in your favor.

Research local market conditions

Dov Hertz says, “Real estate is local; hence, you need the pulse of the place you want to invest.” Local factors such as job market, school quality, crime rates, and infrastructure have a high impact on property values. Gather information from city planning departments, real estate agents, and local news outlets to stay up to date.

Pay Attention to New Developments

New housing and commercial developments as well as infrastructures projects can impact the market conditions. New constructions increase housing supply thus stabilizing prices, but at the same time property values increase due to better amenities and infrastructures. Pay attention to local announcements by the government on future projects.

Use Real Estate Reports.

Most real estate companies and associations maintain a record of printing market reports of complex analyses and projections. Reports from organizations such as the National Association of Realtors and CoreLogic regarding home prices, sales volumes, and other relevant factors affecting the market are made public.

Consult Real Estate Experts

Dov Hertz once said, “Real estate negotiations are personal. Create a relationship with the person on the other side.” Industry professionals  are outstanding resources to tap into to get current trends in the marketplace. This relationship, or rapport, with industry professionals will keep you ahead of the curve

in real estate transactions.

Realizing these trends in the market and interacting with professionals would well set you for success in the real estate market.

Here is another related article : NYC Developer Dov Hertz discusses Developing Iconic NYC Sites on a Podcast