Whether you’re purchasing a family home or looking to buy an income property, you’re probably looking at your next real estate purchase as an “investment”. The question is – how good an investment is it. While it’s true that real estate values tend to go up over time, some areas fair considerably better than others. Fortunately, there are identifiable factors that can help you predict whether investment in a given area is primed for growth.
Realtors on Hilton Head Island shared these 12 factors to consider when making your next real estate purchase:
- Income growth – is the area’s income rising faster than the provincial average? That’s a good indication that people will be making upgrades to their properties and that homes will demand a higher price in the future.
- Population growth – again, compare this to the provincial average. A rapidly growing population often means that within a few years, people will be on a quest for space, driving up property prices.
- Job growth – More jobs means higher incomes and people moving into an area from other regions, both of which are directly related to real estate inflation.
- More than one major employer – When an area relies on a single major employer, it is putting all of its proverbial eggs in the same basket. Should the company fail or relocate, the result is usually a depression in the real estate market as families relocate to find work.
- Nearby real estate boom – Is there an economic boom happening in a nearby community? The benefits of that boom can often spread to surrounding areas, making real estate investment a smart choice.
- Nearby new development – New commercial developments can attract jobs as well as visitors to the area, which can mean an economic boost for the region. The construction of a new factory, college campus, performing arts centre or sports complex might be a signal that it is time to invest in real estate.
- An atmosphere of growth – Look at the political situation of an area. Are its municipal and provincial leaders committed to facilitating growth?
- Strong economic development – If you want to know whether a city or region is working hard to attract investment and promote growth, give a call to their economic development office and ask a few questions about how the area is growing economically. Pay attention to how helpful and proactive they are, while keeping in mind that there is a lot of confidential information that they will not be able to share.
- An area of renewal – Evaluate some of the older portions of an area. Are they being kept in good repair and are new companies moving in? Look to invest in areas that are being renewed rather than in places with empty storefronts and office buildings (even though sites like office space in Austin Tx getting more and more popular among tenants).
- Transportation improvement is underway – a city that is investing in its transportation system is preparing for growth and has an eye to the future – a good sign for real estate investors!
- Attractive to baby boomers – the baby boomers are starting to retire and looking for places to spend their money! Regions that can attract these people have a good outlook for home values.
- Short term challenges with silver linings – Challenges such as plant closures can cause a temporary drop in real estate prices – but if you see a turnaround on the horizon, then lower prices could mean a good buying opportunity.
While no one factor can definitively predict home values in the future, a combination of factors can be a good indication of how good a given real estate investment might be. If you’d like help in analysing any of these factors for yourself, then contact the Woolcott team today.