How to Spot What Drives the Real Estate Market

It’s almost difficult to find out what’s going on in the real estate industry if you track media reports. And, actually, for real estate investors, the national housing figures really mean nothing – and that’s generally what you see in reporting.Do you want to learn more? Visit Vancouver Real Estate Market.

What’s happening at the backyard of your property area is the crucial thing for a real estate investor. But even then, how can you say whether your region booms, slumps or recovers?

The main difference lies in understanding what the economy really is DRIVING and what it is INFLUENCING. And the thing that I’ve always known instinctively but never understood explicitly is that the media reports are almost always focused on the issues that INFLUENCE the economy not the factors that propel it.

The factors that cause this are more dramatic. Not too many media outlets will be pleased to learn that for the third year in a row the population of an city has risen by 8 per cent. It’s just not funny or thrilling. But they would hop over any suggestions that a new harmonized tax would kill the new home real estate market, or that banks will not lend money to anyone because of the tightening of laws, or that consumer trust in house prices is always high or always weak.

The connection to this? Things such as interest rates, borrowing costs, regulations, consumer trust and investment options such as the stock market are all factors that impact the real estate market. In reality, these are not the factors which drive it.

According to comprehensive research by Kieran Trass (author of The Housing Bubble) the driving forces behind property markets are: factors influencing demand such as demographic shifts, building, number of people per household and level of employment; factors influencing the financial elements of house prices such as average rental rates, average resident income, availability of fines

The drivers of the market are what will ultimately carry it from one step to another and it takes a mixture of factors not just one strong variable to turn the business around. On the other hand, market influencers that raise short-term opportunities or red flags to be aware of but they don’t push the market into a new phase or out of an old phase.

It has been said before, but it is worth saying again: Forget what the paper headlines say about the housing market. Reflect on what happens at your backyard. And when you’re investigating what’s going on, you’ll be able to pick up a copy of this book-The Housing Bubble.