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5 Clues to the Health of a Local Real Estate Market

Written by Posted On Thursday, 08 September 2016 18:37

Whether you’re a homeowner, a potential buyer, or a realtor, it makes good sense to stay atop real estate trends. But considering the never-ending flood of forecastspredictions, and reports on the state of the real estate market — some of which outright contradict one another — it’s difficult to know which reports to trust and which to ignore.


While savvy real estate buyers and sellers try to stay abreast of industry predictions and overarching trends, they also understand that real estate is a lot like politics: Local events tend to play a much larger role in local property values than national trends.


Taking the Temperature of Your Market


When it comes to buying property, every potential homeowner has his or her own wish list. That makes it difficult to pinpoint specific factors that make for “must buy” property.

Many people first consider their finances when making a purchase, noting the monthly mortgage payments should be no more than 28 percent of pre-tax income. Others consider location above all else, prioritizing a dwelling close to home so they can bike to work. You, of course, might value something entirely different in a new home. 

Whatever your personal taste in property, the real danger is completing a transaction without first knowing the market. To inform your real estate decisions, consider the following five factors that heavily impact local home values:


1. School quality. High-quality schools often signal a stable housing market. Homes in these areas might be more expensive, but they also have stronger resale values.


Consider the benefit of not having to pay private school expenses as a way to offset the added upfront investment. Even if you don’t have kids, buying a home in a first-rate school district can pay dividends.


When researching school quality, find news reports on the school district’s projected spending. Compare its budget to nearby towns and counties as well as state and national averages. Many school systems also publish extensive budget data on their own websites. Additional information is available online through and


2. Infrastructure reliability. The cost and convenience of living in an area greatly affects home values as well as residents’ quality of life.


Measure the frequency of media stories on power and cable outages, water main problems, and storm-related flooding. You might visit the city’s department of public works to ask about the age and condition of water and sewer lines in the home’s neighborhood. A visit to your city’s permitting department should help you determine how common homeowner repairs — whether from vandalism or weather-related incidents — are in the area.


When touring a neighborhood, pay attention to your cellphone reception and connection to your wireless data network. Dead zones can be tough to live with and can hurt resale values. Inquire about the availability of high-speed internet and check online reviews of area internet service providers.


3. Demand for housing stock. New construction trends and forecasts offer clues to the future value of homes in an area.


Heavy construction typically implies strong job growth and means increased property values for homeowners. A spike in construction also might lead to more of the amenities homebuyers appreciate, including better transportation options, shopping and entertainment, recreational activities, and schools.


Talk with a real estate agent to learn about the current inventory of homes in various price ranges and to learn whether those numbers have changed recently. You can also find this information on your own, including the average number of days homes have been listed on the market before sale, through the National Association of Realtors.


4. Owner-occupancy rates. Steady and increasing market values favor areas with higher owner-occupancy rates. Short-term rentals can be incredibly beneficial when you’re planning a vacation, but they actually end up posing risks for neighborhoods.


Some short-term tenants end up using the rental property to host raging parties, creating traffic issues and noise concerns for neighboring homes.


Search AirBnBVRBO and HomeAway to see how many rentals properties are available in the neighborhood. If numerous rentals are available nearby, you might want to reconsider your options.


5. Environmental health. Be sure to give the neighborhood a physical checkup to ensure your future safety and comfort.


Check the quality of the drinking water for high levels of lead, bacteria, pesticides, minerals, or chlorine. Visit the city or county health departments to determine whether there is a higher incidence of any specific form of cancer or disease among area residents. 


After assessing the physical health of the residents, examine the economic health of the area. A vibrant local economy with low crime and solid plans for future expansion bodes well for future home values.


For a higher-altitude look, read through the Federal Reserve’s “Beige Book.” The publication comes out eight times a year and includes a real estate review.


Movin’ Out


When it comes to making good real estate choices, remember the old adage of “location, location, location.”


To determine the desirability of any location, go local for clues about quality of life in the area before you make a decision. A few hours of research will prove invaluable in protecting your finances and ensuring long-term happiness.

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Michael Gleason

Michael Gleason, an entrepreneur and technology expert, is founder and CEO of and Consumer Brands LLC innovative technology and publishing companies based in Newport Beach, California. 


Michael worked in Washington, D.C., for former US Sen. Tom Harkin and advised President Bill Clinton. Michael holds degrees from the Massachusetts Institute of Technology and the University of California, Los Angeles.

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