Make Sense of the Real Estate Markets: Watch What You Read
How do you make sense of the real estate markets? Watch what you read. Real estate investment pros need to make sense of millions of pieces of information floating around out there. Everywhere you look, people are telling you to get in on one investment product or another, for this reason or for that reason. All the hype out there sounds great but what can you believe?
Too many articles are designed to sell you stuff and give you emotional triggers that prompt you to buy. When you sense this happening, be wary.
I see articles every day tugging at the emotional triggers to buy. For example, just yesterday I read two articles on Cape Coral Florida. One says it has had a price increase of over 25% in the past 12 months. This would edge a lot of people into buying mode. However, the next article (read 5 minutes later) says the appreciation rate has grown by almost 1%. Why the huge difference?
It turns out both stories were correct. It is all in the language! The article citing the 25% price increase over the past year was talking about the purchasing habits of today’s buyers. Today’s buyers in Cape Coral are buying houses that are more expensive. The average home bought this last year is of a larger size and higher caliber. If a different caliber house is being purchased this year, it is a sign of changing times. But it is not the same thing as saying the value of a particular home has increased by 25%.
The article discussing the almost 1% appreciation (value increase of a particular house) is a more accurate understanding of what a market is doing.
Now, are you as excited about a market that has a 1 % appreciation rate as you are about an article that infers a 25% increase?
To make sense of the real estate markets, watch what you read. Look for logic based information and make sound decisions. After all, if you want to invest for cash flow or for capital growth, understanding the real market conditions is paramount.
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