Why do real estate trends matter?

Question

Why do real estate trends matter? There’s a lot of real estate data out there to analyze, like how quickly home prices are rising or how long homes in your area are taking to sell. All this information can quickly feel overwhelming if you don’t have a grasp on what the data means and why it matters.

Housing Trends

Chris John · Answer

@Mitchell Coles

I'm not sure if this a rhetorical question or not, but here are my thoughts.  A rising tide lifts all boats.  Alternately, no matter how sweet the boat is, if there's no water in the lake, it's kind of a bummer.

I'd definitely say it's a great idea to have your finger on the pulse of the overall market, but in the end, I'm buying one deal at at time and there are certain things about that individual deal I'm looking for.  I definitely try to steer clear of insanity (I patiently waited for the world to fall apart in 2007-2008 because I knew way too many people that were buying houses that they couldn't afford), but I know I can fall victim to "analysis paralysis" and try to be mindful of that.

A healthy dose of "fortune favors the bold" and "fools rush in" seems to work for me.

If you need anymore platitudes, hit me up.  haha.

Jobie DeVinney-Walsh · Answer

Oh my! Trends are everything to make good decisions.

When there is a trend up, that means demand for that item or service is going up.

Ever notice that before holidays when a lot of people travel, cost for gas and airline tickets go up? That’s beccause there is a growing demand for gas so we can price it higher. Of course if there is a surplus of gas then the econmic law of supply and demand tells us we can’t increase prices. But this is a lecture for another day.

If you see demand for the type of properties you have is going up, you can price accordingly. You will, as they say, leave money on the tabe if you don’t spot and respond to trends early.

You ask about analysis… Spotting the trend is meaningless unless you understand what is driving the trend.

We’ve seen people move from the densely popuated areas to the suburbs. Recently Covid-19 was the driver. Other’s moved due to hurricane disasters. Those who moved due to Covid-19 might consider moving back to the cities if they feel Covid is under control. But if they were displaced due to a natural disaster, the length of time to rebuild the area may be a deterrent to moving back.

Embedded in the trend is the who…who are the people involved. For example, if the folks moving are families, then two and three bedroom units will be in demand  and the advertising message should include statements about qualities of the schools and low crime.

Well, this is a very short explanation about the importance of trends. Trends are only a part of the total decision making process, but it is a good place to start.

There is only one other thing to point out – trends are a bell curve, so what goes up will come down. If you are flexible and nimble you can continue to be profitable.