Although much has been said about the “housing market” in recent years, there isn’t a single housing market anywhere. The same can be said for what’s known as the “international market.” But the fact is, housing markets are made up of multiple markets in different areas, and as Jason Hartman says, even those markets are made up of “micro markets.” Evaluating a potential investment in any area involves considering factors on all these levels.
National and international housing market profiles are made up of statistical averages and prevailing trends in the majority of smaller markets in a country or group of countries. That’s why, when mortgages collapsed and homeowners were forced into foreclosure in states all around the US a few years ago, it was possible to speak of a housing crisis nationwide, although not every area experienced the same degree of difficulty.
Likewise, trends in real estate around the world can suggest a general picture of an international market as a whole, even though individual countries – and areas within those countries – may be experiencing very different condition. For example, although the real estate “market” in Europe appears to booming, slowdowns can be seen in Germany and France – and within those countries, certain regions are still experiencing am upsurge in home prices.
If each city or region can claim its own market with its own considerations in terms of price, location and viability for investors, then the micro market level is where actual purchasing decisions can be made. Micro markets can be neighborhoods, subdivisions, localized slices of a city or region’s overall housing market with their own defining features.
These places are characterized by accessibility to schools, jobs and the pizza parlor on the corner – factors that can reveal what kinds of properties can be purchased and at what cost, who will live there and what kind of rent they’ll pay, and what kind of local regulations will govern construction and property maintenance.
Trends in the macro market will affect the micro market, too. A promising income property in an apparently flourishing neighborhood could be affected by the city’s loss of a major employer, or an economic downturn due to other factors. Statewide conditions can also affect local markets, down to the smallest details. And regional events such as the recent Hurricane Sandy can create a unique, short-term market with its own special needs.
Successful income property investing depends, as Jason Hartman says, on being an Area Agnostic™ – willing to consider property purchases in any area with good investment potential. And acquiring all the knowledge you can about the various markets, large and small, that relate to those properties can create a foundation for a long-term investing career based on diverse assets able to withstand the fluctuations of nature and the economy. (Top image:Flickr/Duncan)
The Jason Hartman Team
