NWA REAL ESTATE MARKET & 5 THINGS THAT IMPACT IT
The NWA Real Estate Market can be tricky to understand at times. One day, interest rates are going up and the housing market is in trouble. The next, you hear that loan programs are increasing in order to open doors for new buyers. However, the reality is most real estate happens at the local levels. For example, something happening in New York doesn’t have much impact on the NWA real estate market. It is important to know your market and what influences it.
Here are five key things that impact our NWA real estate market:
- Demographics – Every real estate market has it own unique set of qualities. These qualities, or demographics, determine just how strong, or weak, it is. Local demographics can be anything from the employment rate to the strength of schools. It can also be crime rates, average household income or population. To best gauge the strength of the market, you need to look at as many of these figures as possible. Finding demographics can be as easy as looking at the local town website. You can easily find the tax rates, crime figures, unemployment numbers, schools in the area, new housing permits and almost anything else you deem relevant. Real people in real towns do real estate. Demographics often hold the key for where the market will go next.
- Inventory – Supply and demand also controls real estate. Sellers are more willing to negotiate when the buyer pool is reduced. Because of this, home prices tend to be lower. Yet, getting the property at a bargain may hint to trouble selling it. On the flip side are markets with limited sellers so buyers are more willing to pay a premium. Always ask your real estate agent about the current inventory and changes over the last year.
- Foreclosures/Short Sales – When a foreclosed property sells, it lowers the comparable sales for every other property. This has an impact on properties trying to sell or even refinances. You can find current foreclosure numbers in town hall. It is also a good idea to ask your agent to provide you a foreclosure sales chart. If the sales prices are greatly reduced, it can have an impact in the market.
- Days on Market– The average days on the market is very valuable. It tells you how long or quickly homes have sat on the market before selling. If the average days on market is shrinking, it’s a sign that buyers are coming out in full force. When they are getting longer, inventory could be poor or buyers are looking elsewhere. If days are getting longer, it is a poor indicator of things to come.
- Price – Price is typically the bottom line for any market. If prices are rising, the market is more desirable. If prices are falling, sellers are looking to leave and buyers are looking elsewhere. Obtain as much data as possible when investigating price adjustments. One or two high end sales can completely change the average sales price. This is why a median or mean price number is more reliable. These methods throw out the lowest and highest sales and provide a more realistic snapshot of the market.
It is always helpful to know your market before investing your money. Use these five things to help determine the strength of your market.