Remember high school Economics’ supply and demand? If there is an increase in demand for your product, you raise your prices. If you have an increase in supply, prices fall. Well, it turns out that is the best advice anyone can give. When we look at real estate investments, we always want to buy where there will be increased demand. Then, when the time is right to sell, you will be well-positioned to make a substantial return on your investment.
From 2001 to 2004, the U.S. experienced a housing boom, meaning the demand exceeded the supply. The nationwide average home price during this time increased 25.6% – mainly because of the East and West coast and Florida booms. But it did not stop there, home sales also improved by 28.7% according to local MLS. With such housing booms how was 2006 supposed to compete? The U.S. Census Bureau chart for Median and Average Sales Prices of New Homes Sold in United States indicates that for 2004 the median sales price was $221,000 with the average at $274,500. In 2006 the median sales prices rose to $246,500 with and average selling price of $305,900. The higher demand for houses in 2004 paved the way for the 2006 housing price increases. But how do you know where the demand is or will be?
When dealing with real estate you always want to start at the bottom of the bell curve, ride the upside and sell before the fall. As long as you make an educated decision on where to buy, your real estate investment should continue to rise in value. For example, you would not want to buy a home in a city where a major corporation had transferred to another city. Sure the houses will be less expensive, but people are less likely to move to a city with a decreasing job market. If you buy in this city, the health of your investment will suffer.
The one good aspect of real estate investments is that there will always be a demand for housing especially with population on the rise and foreigners consistently moving to the U.S. If you look at demographics and the job markets in the area in which you are considering buying, it will help you in your decision and maybe even save you from a big mistake. Remember there will always be a demand for housing. The best way for you to gain financial health is to get some supply!
To learn more about how Real Estate Investments can help secure your family’s financial future, go to HANA’s website at bank where you can find more great investment information. And while you’re there, please sign up for your FREE Financial Health Real Estate Starter Package full of tips, newsletters and much more. Plus, you are cordially invited to attend one of his real estate investment workshops by visiting FinancialHealthRealEstate.com/UpcomingEvents.html. For additional information listen to one of Dr. Alan Rosenthal’s investment talks at FinancialHealthRealEstate.com/InvestmentTalks.html.