Cracks in the Real Estate Market?

How is your local market doing?  Have you checked the statistics of late?

Part of real estate investing is being prepared and keeping your finger on the pulse of the market.  Good deals can be found in any market, but there is a time to be aggressive and a time to use a little caution.

Cracks in the Real Estate Market?

I’m invested in many areas throughout the country, but in the end know my local market best.  I will use it as an example of what I am seeing and suggest you check your local market as well.

Year over year performance showing signs of a slowdown

As you can see in the infographic year over year performance for the month of June in my local market has seen a slowdown nearly across the board.

Granted 2018 was a strong period for the housing market, so the comparable is a high bar, but either way things are clearly not as hot as they were.

Plus, with interest rates plummeting to new lows a few months ago that should have added a boost to this summer’s action.  The summer clearly hasn’t kicked off strong.

  • Closed sales: down 6.3% and 9.6% for single family and townhomes, respectively.
  • Median Sale: price basically flat for both
  • Median Days to Contract: increased for both

These are the stats you should pay attention too.

Ironically, inventory and months supply shrunk which are things that usually drive demand, thus prices higher.

So what gives…?

If prices and sales volume aren’t growing, but inventory is down it could be the size of the buyer pool is shrinking as people are getting priced out of the market.

Think about it.  Prices can only appreciate so much before it becomes unaffordable for a large segment of potential buyers.

The market has gone up for nearly a decade straight, eventually something has got to give.

This isn’t me predicting a crash.  I’m still acquiring properties.  However, I am being very particular about what I purchase.

It’s another reason why I love rental properties.  You purchase at a price where the numbers make sense and the property will cash flow, thus providing you income.

If the real estate market pulls back it really doesn’t matter as you still collect your rent and hold the property and can ride out the cycle while making income.

That’s why it is so important to run the numbers on a property – so be sure to use that property calculator

Here’s hoping you buy right on all your properties!

P.S. – If you are a newbie here is your complete guide to buying right: ScaredyCatGuide to Investing in Rental Properties 

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