As a real estate investor, it is essential to research emerging markets. Real estate investment is highly lucrative when you dive in before others realize the vast opportunities accessible.
Investing in already existing leading markets may be capital intensive. For this reason, savvy investors search for secondary markets that have great potential to grow.
Achieving this should be a deliberate event and not based on luck. In this article, we will explain the indicators to look for when finding emerging real estate markets.
The economy of an area has tremendous impacts on the real estate of that environment. If there is low economic growth in a region, real estate will not be lucrative. However, when there is high economic growth, it will flourish.
It would be best if you consider the local economy when you are searching for emerging markets. But how do you know whether the local economy will support an emerging market? Below are some pointers.
1. Population Growth
When the economy of an environment is booming, the population in that area will experience a steady surge. As the population increases, there will also be an increase in the demand for houses. The resultant effect will be that the housing market will grow over time.
If you want to know the population growth rate of an area, it would be best to check the US Census Bureau website. When you get this information, exclude the birth rate from the population growth. That is because children do not rent or buy properties.
Instead, focus on the number of people migrating into the area from other places (net migration). Doing so will present you with a better picture of the rate of population growth.
2. Job Growth
Job growth is a vital indicator that helps you to find real estate emerging markets. To know the job growth of a location, you need to consider the following metrics:
- Current employment rates
- Compare the current employment rates with the national average
- Note if the employment rate is decreasing or increasing over time
- Presence or absence of growing job opportunities in various sectors
A visit to the website of the Bureau of Labor Statistics will provide you with all these metrics. Apart from this, you can research the outlook report of the community that you are considering for investment.
Specific Housing Indicators
There are also housing indicators you should consider when searching for emerging real estate markets. These include:
1. Rental Rates
Before you invest in an area, observe the rental property rates. If it is increasing, it indicates that the demand for rental properties in that environment is high.
It is better to settle for places where the rents have been increasing for the past years. You can obtain this information from Zillow’s observed rental index. It will provide you with access to rental data as far back as 2014. Almost any other property listing website might have this information. Also, you can collect data for specific areas by filtering searches using zip codes.
2. Number of New Constructions
We believe that the number of new constructions in an area is one of the best indicators for real estate emerging markets. In emerging markets, you can be able to observe several new houses of different classes springing up everywhere.
You can obtain the number of new constructions from the census bureau. They collate monthly and annual statistics of building permits.
3. Days on Market
Days on the market is an indicator that shows you how long an average property stays on the market before buyers make an offer. The higher the number of days, the less lucrative the real estate market.
On the contrary, the lower the days on the market, the more lucrative it will be to invest in that location. Such environments have a surge in the real estate market. You can get this information from the Realtor.com research tool.
4. Existing Home Sales
Aside from the surge in new constructions, existing-home sales are another essential indicator to consider.
A high index of home sales signifies that the area is experiencing a boom in real estate. The National Association of Realtors (NAR) can provide you with adequate information concerning existing home sales in any neighborhood.
Finding Emerging Real Estate Markets
Real estate investment is not a game of luck. One of the beneficial skills that you should possess as an investor is identifying emerging markets. You can do this by making use of the indicators above.
Also, focus on a particular neighborhood before you search for a property. Other essential indices that you need to consider before settling for a location are:
- The availability of amenities
- Crime rate
- School distribution data
With all these, finding emerging real estate markets will be like a walk in the park.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.