“Real estate agents always say it’s a good time to buy.”
I was working with a client yesterday, Sarah, who is interested in buying an investment property and she asked if it’s a good time to buy or if she should wait.
A crucial aspect of my job as a Realtor, and one part that I absolutely LOVE, is to provide my clients with education and insight, helping them to understand market trends and data along with their budget and goals– so that they can evaluate whether or not the numbers work for them at a specific property.
Let’s go back to what Sarah said, “Real estate agents always say it’s a good time to buy.”
There’s a very important statement that needs to be included—It’s a good time to buy when the numbers work for you. It’s math and Sarah needed help to understand the numbers so that she could decide if NOW is the time to buy or if she should wait.
First, we looked at the monthly mortgage based upon her down payment, potential rental income in the areas/towns that she’s interested in, additional property expenses to anticipate (utilities, improvements/maintenance, & vacancy), and long term equity growth projections. This helped us to identify the price range that would work for her. We then juxtaposed that information with the areas that would both work within her budget AND provide the rental income necessary to “make the numbers work.”
==> Do the numbers align with the her goals and the market (meaning can we find a property at the price + condition that works in a geographical area that’s suitable for her)?
Next we looked at the market data in the areas that she’s interested in–what can we infer from the market data over the past year, three years, six years, and ten+ years to inform us as to where the market is headed? We looked at local data, statewide data, regional data, as well as overall national trends. It’s important that Sarah understands how to utilize this information–it’s HER money! It’s HER investment! She needs to be able to make informed decisions.
Successful Realtors constantly examine the overall market trends in cities, neighborhoods, states, and regions in order to be able to guide their clients. And be able to distill that information down in order for it to be useful for their clients to understand and utilize.
One metric to consider is the median sale price in Rhode Island. Here’s a snapshot of market grown for single family homes since 2014, the year that I obtained my real estate license.
2022 to 2023, prices went up around 6%.
What do you think is going to happen in 2024?
In my market report I just finished that I’ll be posting tomorrow, I project that prices will go up around 7% in 2024. However, if interest rates go below 6% I believe that prices would go up even more (so be careful what you wish for buyers!).
There are several metrics I look at in addition to the median sale price to determine that projection–in addition to the insight of industry experts that I learn from.
The overall trend is that prices will continue to go up. But that still doesn’t automatically mean it’s a good time to buy–for you. In order to figure that out you have to dive into the numbers rather than an arbitrary date or opinion about the market. Need help–that’s what I do! If you don’t follow me on YouTube search for my name and find me (the algorithm works best if you organically find me rather than including a link).