Monday, December 27, 2010

Key Research Data to Consider When Evaluating an Area by Ravinder Tulsiani

Key Research Data to Consider When Evaluating an Area by Ravinder Tulsiani

Mortgage Rates:
Are mortgage rates increasing or decreasing? The general level and the direction of interest rates can greatly affect the demand for real estate. As mortgage rates increase, the demand for real estate decreases and vise versa. Higher interest rates translate into higher mortgage payments for single-family home-buyers and inadequate cash flows for income property investors. Falling mortgage rates result in greater demand for real estate and faster appreciation.

Is the job base in your community growing or is it declining? The availability of high paying jobs can greatly impact appreciation growth rates. If good job opportunities are available in an area, the demand for real estate will be high. People will move to the area to take advantage of job opportunities. The end result will be increasing real estate prices.

Look for rising incomes and strong demand for workers. The more money you make, the more you can afford on living expenses including housing payments. (pay attention to the housing affordability index)

Net Migration:
Net internal migration (inter-provincial movement) plus net international migration. The more people coming into a region, the greater the housing demand.

Natural Population:
The natural population (births - deaths) is slowing or increasing? An increase in natural population will eventually increase the demand for additional housing stock in the longer term.

Consumer Confidence:
Confident consumers will support demand for home ownership, while a weak consumer confidence will result in consumers shying away from home ownership.

Resale Market:
A healthy resale market shows lots of transactions. The greater the numbers, the easier it is for you as an investor to quickly sell your property if you need to.

Vacancy Rates:
Over supply of a particular type of income property can result in high vacancy rates and reduced cash flows making it difficult for property owners to meet their financial obligations. The end result is lower prices.

Where can you find the above research information? Just Google the following organizations:

Canadian Mortgage & Housing Corp.
Housing Research Resources
HUDUSER Database
Joint Centre for Housing Studies
The Land Centre
Research Institute for Housing America
Statistics Canada
Your local Real Estate Board.

About the Author

Ravinder Tulsiani is a published author who has written about personal finance, real estate, self-help and online marketing.