There's more evidence this week that the buying frenzy of the past few years in the West is slowing down, but the pace is now picking up in the Midwest.
The National Association of Realtors released it’s pending homes sales data for March this morning and it shows that contracts to purchase existing homes reached the highest pace in nearly a year last month. But that’s just a national statistic, which is fairly useless.
When we look closer at the regional data, pending sales fell 1.8 percent in the West, and are now 7.9 percent below a year ago.
On my other podcast, The Real Wealth Show, I interviewed Fannie Mae’s Chief Economist, Doug Duncan about this new data. He said the biggest problem with new homes is that builders are building big, expensive homes. They are likely doing this because they can get a higher profit. But demand seems to be weakening.
With all this info, here’s a tip for real estate investors:
You probably want to buy property that cash flows and where rents will increase. And you don’t want to buy property that will decline in value. So knowing that a hike in interest rates could slow down sales in areas where affordability is tight, consider only investing in areas where affordability is in check. Interest rate hikes won’t affect those areas.
And when you combine affordability with job growth and population growth, you have a winning combination - just like back in 2005 when Texas.
If you’d like a list of areas with job growth, population growth and affordability, visit:
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