Real Estate Market Review
Real Estate Market Review 2017
The real estate market review is a critical element of being a success Real Estate Investor. Real estate is very cyclical. It doesn’t always go up and it doesn’t always go down. We can look at the history of the local real estate market to better understand the trends and more importantly, where it is currently headed.
Thursdays Classic Case study: 26730 Streetsboro
This property was purchased as wholesale for a mere $56,000. That’s right $56,000. The rehab was quick and easy, a simple paint, appliances, landscape clean up. It was ready for market and very quickly sold for $78,000. A traditional fix and flip story but if you want to understand your market at a high level, let’s look at what happened after out transaction ended.The real estate bubble came to an end. Buyers came out of their shells and found it to be “safe” to purchase again. Indications were clear that the worse was behind us.
What Happened Next
Three years after the primary homeowner purchased this home, they made a decision to sell. They hired a qualified Agent and found that the value of their home had increased…..significantly. They put the home on the market and very quickly, fetched a sales price of $100,000. The time between their purchase and they day the sold, 3 years, 4 months, 16 days. OR 1232 days. Their home earned them $17.87 per day. Not a bad passive income! If you think about it, that would have been enough to cover their mortgage. They lived in the home for free. The home increased in value 22%, which is astounding. That is a great indicator that the market hasn’t only recovered but completely rebounded and is strong.
More to the story
Fast forward three more years. The new Owners have decided to move and place their home for sale. They hire a qualified Agent. The Agent completed a CMA, a comparative market analysis, and determines the home has increased in value again. They put the home on the market, and this time, they get aggressive with the price, maybe a bit to aggressive. After a month, which is an eternity in a hot Sellers market, they lower the price and draw an offer in less than a week. The close and sale the property for $165,000. An increase of 60% in value or $54.43 a day. Impressive.
Where to Next?
Knowing that real estate is cyclical and we have just experienced massive appreciation, I would be cautious. Cautiously aware are any and all indications of a correction. This will not be the likes of what we experienced in 2007, 2008 but it will happen. This is why a real estate market review is critical to understanding your market so you can watch for market indicators and react accordingly.
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