Property Crossroads - Real Estate Info

Securing a Good Deal during a Real Estate Bubble

by Maricel Ferrer-Custodio on February 10th, 2007

The real estate climate continues to slow down but there are still opportunities available for the astute investor.  One of  the basic means of earning a profit in any business is to buy low and sell high.  Hence, now is the best time to look for investment properties to buy.  However, not all low-priced real estate is a bargain. You must learn to look for the good attributes of a property to secure a good deal.

These are the things you should consider to secure a real bargain during a real estate bubble!

1) Good Income Trends

Look for areas where there are high-paying jobs and  low unemployment rates.  If a place has a good economy then there will always be a demand for real estate; specially for offices and residential properties.   The town or city must have a sustained wealth not driven by just one industry or factory.  A wealthy population is more resilient to a rise in interest rates. They can still afford to buy irregardless of any increase in property prices. To add, good employment opportunities will attract more people in the area creating more demand for properties.

An example of such an area is San Francisco, who has the highest per capita income in the US followed by Boston.

2) Population Growth

A growing population is a good sign of a growing demand in real estate.  Look for areas where there is a steady growth. As I have mentioned earlier, good employment opportunities continues to attract people.  New infrastructure developments such as airports and highways makes an area accessible to more people and at the same time encourages more businesses. Great schools makes families move in the area.

As a general rule, look for long-term developments, infrastructures in place, low crime rates, good natural environments and amenities that would attract people to work, live and do business in the area.  Be weary of a temporary surge in population growth fueled by retirees.  The area must have a good mix of people from all ages to sustain its growth.

CNNMoney.com’s Business 2.0 cited Panama City in Florida as one of the Top Ten Cities To Buy Now.  The city is planning to build an airport by 2008 making it more accessible to more people and visitors.  The new facility will dramatically add value to the City of Panama.  It will possibly ride the same real estate boom that Fort Myers enjoyed when the Southwest Florida International Airport was built.

3) Development Restrictions

Real Estate is very sensitive to the law of supply and demand.

During an oversupply, vendors are competing with each other to unload their properties, thus dampening the market.  This is usually the scenario in areas where there are a lot of foreclosures and when there is over development.   On the contrary, prices of real estate in places such as New York, Los Angeles and San Francisco continue to stay strong because there is a continued strong demand but limited supply. 

The development restrictions in San Francisco specially near the Golden Gate Bridge, coupled with the pristine environment of the area continued to attract high earners who are willing to pay top prices..

Los Angeles because of its geographic constraints and restrictions on building has a very limited supply of properties.  This pushes the prices up at record levels compared to the other US states.  Other factors such as employment opportunities, popular man-made attractions and its famous beaches continues to draw people to LA. 

Meanwhile, the largest deal in real estate history in recent times happened in New York. Tishman Speyer Group acquired 110 apartment buildings in Lower Manhattan for a tag price of $5.4 billion.  These apartment blocks are occupied by rent-controlled tenants.  This just proves the demand for properties in New York.

In conclusion, if you have the money and your investing for the long-term, now is the best time to buy a property.  There are great bargains in the market that could generate you a good capital growth.  Learn to spot a good buy using this basic guideline. I assure you that real estate is still one of the best forms of investment.

Share This

Related Stories

• 5 Things to Consider When Investing in a Rental Propery
• Winning the Lottery and Real Estate : a friend questions me on what to do with the prize money
• Understanding the “Real Estate Bubble” as part of the “Real Estate Cycle”
• A Review:”America’s Best and Worst Housing Markets”
• Greenspan: One more person avoiding the blame

POSTED IN: Buying a Property, Educational Tools, Road to Profits