Predicting Real Estate Fluctuations

by : Drew Hartanov

Real estate follows a pattern and key factors will affect the rise and fall of the market. The result of this pattern is that some areas are still hot property markets and others are not. Can you use this information to your advantage to buy or sell a house for yourself? If you are considering buying or selling, then understanding some of the facets of the real estate market will help you to evaluate your own unique situation.

Real estate is not only linked to economic growth, there are also other influences and some of these are regional factors such as population growth, job growth and rising incomes. This means that some areas are still red hot markets and that the increase in others may be dwindling. For instance, the nationally posted figures for increases in real estate this year are 3.2% (that is up to June 2007).

But some areas are reporting much larger jumps than that. For instance, Wenatchee, Washington reports a 24% increase and the Pacific Northwest, Colorado and Utah are showing upwards of 10% appreciation.

In Grand Junction, Colorado, the city's work force has expanded by over 25% since 2002 and property has increased by 65% in the last five years. The area houses a large gas field and the related industries have all expanded. Keeping an eye on natural resources can be one indicator of projected growth in the property market. When large numbers of new employees move into one area, all at the same time, the demand for housing often exceeds the supply therefore houses are scarce and it is a sellers market.

Job growth has long been an indicator for serious realty investors. If you are wondering about the property market in your part of the country, then the local newspaper is a good place to start. If it forecasts that many companies, or even one large company, is moving out of town, it would be wise to keep an eye on the other businesses.

One tell tale sign is an excess of rental signs in property windows and more 'For Sale' signs around than usual. If you are in an area where the market is stagnant and you can ride it out,then this is advisable as the market trend is usually always up. Sometimes the perceived 'drop' in prices is really just a drop in the profit margin that was on paper.

Alternatively, if there are reports that new companies are moving into the area, it may mean that back up businesses will follow. Also check for reports that one of the established businesses in your town is planning an expansion, either way, these changes will bode well for the housing market.