This article originally appeared in the BHGRE blog on August 2018.
Clients expect real estate agents to be intimately familiar with the neighborhoods where they work. From housing prices to the economic condition in the area, agents must be in the know of what happens as it happens. Studying the U.S. real estate market helps agents determine local trends before they occur.
Be aware of the big picture
Many factors affect property value and pricing. National economics, the political climate, social situations and environmental conditions influence the value of real estate. Savvy agents follow the news and its impact on the price of properties. A high rate of unemployment may lower home prices, and reduce the number of available buyers. More people might be in the market to rent a home rather than purchase one. Keeping up with current events around the country helps agents determine the needs of local clients.
Know what shapes the real estate market
Several factors shape the real estate market. Demand is a driving force that determines the price of homes as well as how quickly they sell. Availability is another factor as people want certain types of property. If they are not available, a sale won’t happen. Houses must also be ready to sell. If the home is unusable or condemned, repairs are necessary before the deal will close. Finally, a property must be legally ready to transfer with a seller who has a deed and clean title in-hand. Agents need to assess these conditions to determine how many homes are legitimately available in their neighborhood.
Know core economic principles
Specific core economic principles define the real estate market. One of the leading ones is supply and demand. A house in a coveted neighborhood with few available homes on the market will sell for top dollar. Houses in an area with more available properties than qualified buyers will sell for a lower price. External conditions in a neighborhood also play a role. Homes in areas with political, social, economic and environmental issues will sell for less than houses in more stable locations. Consider a house in a high-crime area will sell for less than one in a safer spot, even if they have the same essential features.
Local data matters
Once an agent recognizes the state of the U.S. real estate market, it’s time to collect data on the local market. Sales and listing data reveal the number of homes sold, the sale prices and whether the houses appreciated or depreciated in the past year. Review the features of recently sold properties to determine what local buyers want. Study the current population data, including median income, unemployment rates and other factors that impact real estate sales. Find out more about financing data, such as the types of mortgages buyers take out, how much money they put down on the properties and the number of specialized loans. For example, a large number of VA mortgages reveal the area is popular for veterans.
A well-educated agent knows where to conduct research. A variety of resources provide national and local real estate market data. On a national level, check out the Bureau of Labor Statistics, Federal Reserve System, Census Bureau, Multiple Listing Service (MLS) and the National Association of REALTORS®. Local resources include builder associations, the chamber of commerce, tax appraiser’s office, municipal planning commissions, county offices, title companies, banks, mortgage lenders and credit unions.
Benefits of knowing the market
Real estate agents who know the market reap the benefits of this knowledge. Awareness of the market conditions helps agents determine what is fueling the market or holding it back. Deciding whether it is a buyer’s or seller’s market makes it easier for agents to set their goals and guide the expectations of their clients. Agents who understand the market provide the best possible advice to their clients. From the correct listing price of a property to getting a great deal for buyers, agents in-the-know offer a higher level of service. Plus, well-informed agents have a myriad of promotional opportunities. Blogging, speaking at local community events and posting on social media are all ways for agents to gain trust, respect and clients.
Trends may last for a year or two or a decade. Most of them begin on a national level then trickle down to the local markets. Agents gain valuable insights by studying the U.S. real estate market. Knowing national statistics today can help agents determine the future of real estate in neighborhoods across the country. Successful real estate agents gauge these trends and leverage them to provide outstanding service to their clients.