A Simple Predictor Of Real
Estate Market Growth
There is no sure fire way to predict real estate market growth.
However, there are certain trends and indicators that can help you
predict where markets will grow in the long run.
One such indicator is the building of new transportation infrastructure.
geographic area that benefits from the construction of new highways,
bridges, rapid transit etc., will typically see an increase in the
number of people moving to the area, as well as an increase in the
prices of the real estate in that area.
For example. Let's say a
new highway is built between a large city and a smaller city that cuts
the driving time (commuting time for workers) from an hour, down to 40
minutes. All of a sudden that small town becomes an attractive
alternative to living in the big city. Once the highway is complete,
families start to move there and buy homes. The market grows,
predictably, and real estate prices increase due to the demand for
example. Let's say the subway line or rapid transit line in a city is
extended into a new area. All of a sudden people living in that area of
the city can commute to the inner city much easier and cheaper. This
area, much like the area in the previous example, becomes a more
attractive area to live due to its easier accessibility. Real estate
market growth in that area is sure to follow close behind.
Now here is the really
interesting and attractive
thing (from a real estate investor's point of view) to note about
this type of real estate market growth. The price of real estate in
these markets typically does not increase until the infrastructure is
complete, and people actually start to move there. As an astute real
estate investor, if you "get in" to the market before the construction
of infrastructure is finished, you stand an excellent chance of
catching the wave of increased demand for property and the ensuing
increase in prices.
Apartment investors can benefit from this as
well. As people move to the area the demand for rental real estate will
increase, driving up rents and commercial property values.
Want to know where the next real estate market growth will take
place in your area? Follow the infrastructure! But remember, there is
rush to run out and buy the first property you see. These types of
infrastructure projects typically take years to complete. As always,
take your time and look for deals that make sense even if the market
doesn't go up.
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