Learn How to Evaluate Your Next Home Purchase in Today’s Market

How will you determine if or when you will buy your next home?

Unfortunately, many news outlets are simplifying the real estate market way too broadly.

This has been happening since COVID-19.

Unfortunately, many outlets would rather produce publications to stir views and clicks, rather than releasing a logical assessment.

In a effort to produce content that is understood by most, often times information is simplified so everyone understands.

Hence, why you’ve seen ‘housing market crash’ everywhere.

Even though it is nearly impossible under today’s conditions.

• As we’ve stated time and time again, the only factor that can cause a correction in the market today is supply.

Therefore, when supply arrives in abundance, this is a factor that makes it most probable that a higher scale correction in housing prices can happen.

See our recent articles; 

• 2023 Real Estate Anticipations 
• Housing Price Projections 
• True Housing Market Results 

for a few recent releases on the topic. 

Although, we have expressed the same sentiment for over a year. 

• An example article is Real Estate: Inflation, Economy & Sentiment.

However, let’s stick to the topic of today’s article.

Let’s get started.

10 Ways to Evaluate Your Next Purchase

1) Check your market’s trend by using Redfin.com‘s Market Insights. 

Simply input your city, or closest major metropolitan area, into the search bar and click Market Insights if it exists.

Use the Housing Market Trends chart to see the direction your market is headed by seeing the recent changes in median home prices. 

This can help you determine the momentum in your local market. 

Ideally you’d want to target purchasing below the median price. 

However, see the next indicators to add to this first indicator.

2) Check your local market’s amount of housing supply by using Redfin.com‘s Market Insights. 

If the information is available, it will be on the same page as indicator number one listed above.

• If your market’s supply is 3 months or less, it it more probable that home price can still rise or stay flat.
• If your market’s supply is 4 months or more, it is more probable that home prices can reduce or stay flat.

A healthy amount of supply is traditionally 4-6 months worth. This amount of supply allows for a healthy balance between buyers and sellers.

• Note: Each market’s demand matters greatly in addition to the amount of supply. 

Price point also has an effect due to higher priced real estate having a more dramatic effect on interest rates. 

A luxury market is not what we are speaking on today. A luxury market will have it’s own unique occurrences.

3) New Construction – 

If you are purchasing a newly developed property, you are reducing the risk highly, due to being a part of the highly needed new inventory.

The likelihood of your property decreasing in value is not impossible. But, you are much better positioned than a 20, 40, 60, 80 or 100 year-old home that was sold at a high price.

You will still want to review the next indicators to combine to all your criteria. 

However, this is a well calculated decision (provided all indicators are considered within your evaluation’s criteria).

• If you haven’t already, check out our article Solutions for Homebuyers in Today’s Market. There is more supporting data to this specific indicator in this article.

4) Fixer Upper – 

If you are planning to buy a property that is in need of repair, and you will use a 203k or a HomeStyle Renovation loan to renovate it, you are also making a wise decision.

Forcing the value higher is a great way to conceal equity. 

Just be sure your plan allows you to arrive at a value that is more than the amount of money you’ve invested. Target a 20% variance in value versus expenses or more.

The likelihood of your property decreasing in value is not impossible, but you are much better positioned by forcing an equity position.

You will still want to review the next indicators to combine to your criteria. 

However, this is a well calculated decision (provided all indicators are considered within your evaluation’s criteria).

• If you haven’t already, check out our article Solutions for Homebuyers in Today’s Market. There is more supporting data to this specific indicator in this article.

5) Location, Location, Location – 

Location points to several important indicators.

Schools district, access to transportation, crime, diversity and access to essential commerce is very important.

• Our article Understanding Location, Location, Location goes through these factors. 

Check it out for further insight on this indicator.

6) Population Trend – 

It is important to know if the location you intend to buy in, if people are choosing to move in, or move out.

This is a direct reflection on the local demand. 

• If demand is low and people moving from the location, you will have a higher probability that home prices can drop or stay flat.
• If demand is high and people are moving into the location, you will have a higher probability that home prices can rise or stay flat.

Population trends are a great indicator on if a location has attractive factors or non-attractive factors. 

You can view this data using city-data.com or census.gov.

7) Employment Trend – 

It is important to know if the employment trends are inclining or declining locally.

Especially in today’s economy, this can be a very important factor. 

We are in a time where many companies may go bankrupt, or have substantial layoffs over the next few years and this will have an effect on local communities.

Check the trend in your area, and keep a ear out for current events, especially with top employers in your area.

Check census.gov or departmentofnumbers.com for direct data on this indicator.

8) Median Income Trend – 

It is important to know if on average, people in the local community are growing in their careers or staying stagnant.

A sign of higher ranked employers is usually pay. 

Good companies pay their employees well (or competitively) because they don’t want to lose them.

When a local economy has what it needs to grow, you will see growth in income among it’s patrons.

This is an indicator to aspirations, growth and the higher possibility of achievements. 

To most, their residence’s appreciation is a integral part of their achievements because it directly ties to their ability to achieve wealth.

You can view this data using city-data.com or census.gov.

9) Crime Trend – 

The rate of crime is an obvious factor that all people are concerned with. 

Especially for families, our children’s safety is a high concern.

Be sure to check the trend of crime and if it is improving or not improving.

You can view this data using city-data.com or census.gov.

10) Local Municipality’s Planning and Development Plans – 

It is ideal to know what the local municipality has planned.

Getting insight to what is on the books for development, improvement or expansion is very important today.

Many cities need infrastructure improvement and we also have not yet solved the vacancy issues in office space and retail.

The planning that cities have in respect to these issues are very important.

This factor alone can provide you very valuable insight to what the city has planned.

Check with your local county’s planning and development department for any public records they can share in this regard.

Conclusion

Okay, you’re all set!

It’s up to you to do your homework if you want to support the best possible choice you can make when purchasing a home.

We hope this article has been helpful.

Thanks for joining us today faithful readers – future leaders.

Love ya and continue to strive for growth.

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