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Economy And Real Estate Are Offering Differing Signals


Ingo Winzer is the President of Local Market Monitor, Inc., a North Carolina based residential real estate forecast company that provides MSA, county and zip code analysis nationwide to investors.


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Business #Economy Business #Economy Nov 27, 2017 @ 03:26 PM Economy And Real Estate Are Offering Differing Signals performance.mark = performance.mark || function(s) {}; performance.mark('content_title_end'); Ingo Winzer , Contributor I write about investing in local real estate markets. Opinions expressed by Forbes Contributors are their own. Shutterstock Seen from above, the economy is doing greatFor each of the last two quarters, GPD grew at an annual rate of 3% ? that's a lotExports are growingThe stock market is highUnemployment is lowThe Fed makes optimistic statements about the future and may let interest rates rise On the ground, though, there's less euphoriaIn a third of the 320 markets my company Local Market Monitor covers, the number of jobs increased by less than 1% in the past yearIn half of those 320 markets, income grew less than inflationIn two-thirds of them, home prices have not fully recovered from the last recession How can there be such a mismatch, and what does it mean for real estate and investing? The most important development of the last several decades is the concentration of economic activityThe logic of corporate enterprise pushes companies to grow as much as possible, which sophisticated technology now facilitatesAt the same time, companies are more reliant on the infrastructure and outsourced services that exist in urban centersThe result is a concentration of economic output in a relatively small number of local marketsJust 50 metro areas in the U.Snow produce 75% of total GDP It may well be that we're on track to have two kinds of real estate markets: those closely linked to the supply and demand cycles of the national economy and those where the local economy is affected more by social characteristics than by production outputSure, in the long term, all these markets are connected, but in the time-frame of real estate investors, the differences may be the key to good investment strategies The investment significance for markets that are closely linked to the national economy is that demand and supply are often out of sync, leading to classic home price and rent cycles that may last just a few years at a timeThese markets present opportunities for bigger returns but also have higher risk; investors need to have specific entry and exit plans and need to pay close attention to ongoing economic developments Local Market Monitor shows data for 25 markets that have a high GDP per person ? one way to identify markets closely linked to the national economy Local Market Monitor, Inc Local Market Monitor, Inc Note that in these markets there is in general a strong relationship between the amount of job growth and the increase in home pricesNote also that those with a big increase in GDP per person had especially strong increases in home pricesAlso note that markets with a big financial sector (Fairfield County, Des Moines, Hartford) or energy sector (Houston, Tulsa) can run on a different cycle than the national economy."> Shutterstock Seen from above, the economy is doing greatFor each of the last two quarters, GPD grew at an annual rate of 3% ? that's a lotExports are growingThe stock market is highUnemployment is lowThe Fed makes optimistic statements about the future and may let interest rates rise On the ground, though, there's less euphoriaIn a third of the 320 markets my company Local Market Monitor covers, the number of jobs increased by less than 1% in the past yearIn half of those 320 markets, income grew less than inflationIn two-thirds of them, home prices have not fully recovered from the last recession How can there be such a mismatch, and what does it mean for real estate and investing? The most important development of the last several decades is the concentration of economic activityThe logic of corporate enterprise pushes companies to grow as much as possible, which sophisticated technology now facilitatesAt the same time, companies are more reliant on the infrastructure and outsourced services that exist in urban centersThe result is a concentration of economic output in a relatively small number of local marketsJust 50 metro areas in the U.Snow produce 75% of total GDP It may well be that we're on track to have two kinds of real estate markets: those closely linked to the supply and demand cycles of the national economy and those where the local economy is affected more by social characteristics than by production outputSure, in the long term, all these markets are connected, but in the time-frame of real estate investors, the differences may be the key to good investment strategies The investment significance for markets that are closely linked to the national economy is that demand and supply are often out of sync, leading to classic home price and rent cycles that may last just a few years at a timeThese markets present opportunities for bigger returns but also have higher risk; investors need to have specific entry and exit plans and need to pay close attention to ongoing economic developments Local Market Monitor shows data for 25 markets that have a high GDP per person ? one way to identify markets closely linked to the national economy Local Market Monitor, Inc Local Market Monitor, Inc Note that in these markets there is in general a strong relationship between the amount of job growth and the increase in home pricesNote also that those with a big increase in GDP per person had especially strong increases in home pricesAlso note that markets with a big financial sector (Fairfield County, Des Moines, Hartford) or energy sector (Houston, Tulsa) can run on a different cycle than the national economy. Ingo Winzer is the President of Local Market Monitor, Inc., a North Carolina based residential real estate forecast company that provides MSA, county and zip code analysis nationwide to investors. Comment on this story Print Website Feedback News Tip

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