Real Estate Investing: 7 Buy Indicators To Keep An Eye On

What signals a good time to buy investment property?

In real estate, as with any type of investment it can be confusing to understand why others are so bullish on buying and some are bear. The financial and mainstream media makes sure to always debate and report the bull and bear opinions, often with opposite headlines and statistics being published within hours of each other. So what indicators should home buyers and real estate investors consider when determining when they should really be buying, selling, investing or not?

1. Interest Rates

Interest rates tell a lot about the market, as well as having a significant impact on what you can buy, and the profitability of your investments. When interest rates are low it creates a demand in the real estate market, and can be very profitable when you sell. This also can cause a big rush into real estate which can cause rapid appreciation and equity growth. On the other hand depending when the interest rates rise can sometimes have a negative effect on the housing market depending on the health of the current economy.

2. Mortgage Loan Applications

Rising mortgage applications suggest a surge in demand for residential real estate, and likely in future transactions too. Make sure to differentiate between purchase and refinance applications.

3. Commercial Real Estate Construction

Commercial property construction is often the first thing to pick up when a market begins to pick up. So look out for apartment buildings, retail buildings, as well as for leasing activity at local malls and office buildings.

4. New Home Construction

When new home construction picks up you can bet prices are taking off and fundamentals are good. Builders normally don’t bet the big dollars it takes to build unless they are very confident in being able to sell. New construction is going to sell for a premium too. And that will help elevate all property values nearby.

5. Hotel Activity

What’s going on with local hotels? This can be a great sign, and it is often easy to track from a distance. How strong are local hotel rates? Are they up or down? How booked are they? For those that want to pinpoint the best property choices look at which hotels are the busiest. What features, design elements, amenities, and locations do they boast that makes them so much more popular?

6. Local Property Sales Price Trends

Don’t just look at prices. Asking prices in particular can be especially deceiving unless you are watching them closely overtime. So look at actual closing prices, and their relation to asking prices in context. Are properties selling for substantially less than being asked? Or are properties being bid up over asking prices or down? Also what are the average days on market before their status changes to under contract or contract pending.

7. Local Conversations

Some of the best insight into your local real estate market isn’t related to big data and statistics at all. Some of the best intelligence comes just from listening in to local conversations in the gym, and at local coffee shops. What are people saying? Are they bullish on buying bigger houses? Are they busy refinancing to buy more properties? If you can’t be there try tapping into what locals are saying online.

I”ll See you at the closing table,

Marcel Umphery the “R.E.I. Successmaker”