People, businesses, and their money move around for lots of reasons. New jobs, better opportunities, tax incentives, high returns … the list goes on and on.
Savvy investors monitor these constant migrations. They look for patterns and take action to capitalize on opportunities and avoid risks.
All this movement affects supply and demand … especially for real estate. So today, we’re taking a look at some of the many factors moving markets today.
In this episode of The Real Estate Guys™ show you’ll hear from:
- Your savvy host, Robert Helms
- His sassy co-host, Russell Gray
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Read the signs in moving markets
We talk a lot about specific markets that are providing great opportunities for investors right now … but what about a year from now? Five years? Ten?
If you want to stay ahead of the game, you need to know how to read the signs of a market on the move.
It’s important to remember that it isn’t the property that makes you money … it’s the people.
A market is made up of people and businesses that have a relationship with real estate. That’s what makes it valuable.
The more tenants you have in properties that you own, the more positive CASHFLOW comes in … and the richer you become.
When you look at markets, the main thing you are looking at is supply and demand. Are people leaving? Are people coming in?
Then, you need to ask why people are moving in or moving out. There are always underlying factors that affect where and when people move.
As you work to identify these factors, you’ll begin to recognize patterns and principles … information that will enable you to spot emerging trends in other markets and get ahead of the pack.
The power of politics and trade
An article in Bloomberg Business Week points out the upside of a global downturn … juicy real estate deals.
Worldwide, many high-end home prices are being slashed by as much as 30 percent. This market information gives us some interesting clues.
These price cuts could indicate future opportunities … these markets could move!
If you’re looking to flip properties, you could purchase real estate now and have a good chance of selling it in the future for more … and not just because of the equity you put into it to add value.
Take a market like London, for example.
London has a reputation for being super expensive. But sellers of high-end homes are slashing their price tags.
When you do your research, you can discover some of the underlying factors contributing to this lower asking price. Recent changes to tax codes, Brexit, and a surge in populist thinking are just a few.
So, people with the means and ability to move to a more friendly jurisdiction will do it.
But London has a historically great real estate market … when things settle down, there’s a predictable chance prices and demand will shoot right back up.
Sydney, Australia, finds itself in a similar situation. The median home price is down 6 percent year over year since last year.
Australia has an economy that is largely driven by supplying commodities to China. But China is experiencing a slowdown, and Australian markets are feeling the impact.
When you’re looking at markets, you’re looking for clues … and international politics and trade can be powerful factors.
Hong Kong has been a strong real estate market … but like many parts of the world, real estate there is tied to U.S. dollars.
The market is down 10 percent since August of last year and is predicted to be down another 10 percent by 2020.
When you’re looking at moving markets, that’s not necessarily a bad thing.
Populous markets have a lot of drivers … and in Hong Kong those drivers have caused prices to go down quickly. That doesn’t mean they won’t go back up.
Hong Kong is generally considered to be very safe for property rights, personal liberty, and financial stability. It’s an economic capital in that part of the world.
All of these factors are clues that tell the smart real estate investor it might be worth digging deeper to determine whether a market has a good chance of turning upward.
If it does, a temporary downturn can be a lasting opportunity.
Clue in on taxes
There are plenty of markets on the move within the United States … and a lot of that has to do with taxes.
Any time you have changes in the tax code, you will see changes in the way people invest their money. It’s an essential clue in identifying market trends.
New York City is the perfect example.
For the first time in a long time, the median price of condominiums in Manhattan has dropped below $1 million. That’s DOWN 6 percent from a year ago.
Under the previous tax code, you could deduct your state and local taxes from your federal income tax.
If you lived in a high-tax state like New York, you could mitigate a lot of those high taxes by simply deducting them from your federal liabilities. You can’t anymore.
As a result, markets like New York City and California’s Silicon Valley are moving down … and low-tax jurisdictions like Las Vegas, Phoenix, and Florida are moving up.
Learn from moving markets
You might never invest in London, Sydney, Hong Kong, or New York … but you CAN learn a lot by looking at why those markets are moving.
Markets move in different direction for different reasons. The more you understand, the more easily you can identify patterns in the trends occurring in your market of choice.
Studying markets on the move is an invitation for you to do the research. A market that works for one investor doesn’t necessarily work for another.
Markets have personalities … just like people.
You wouldn’t marry somebody just because they were the first person you talked to or because your best friend thinks they’re interesting.
You decide on your own investment life … where you want to be, and what you want to be doing.
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