It remains self evident that real estate represents the most significant portion of a person’s wealth generally and the greatest mechanism for securing a lifetime of wealth for the real estate investor. Factors that drive the real estate market most certainly include population demographics, operative interest rates, governmental policies and intrusion, and most significantly, the health of the economy, both nationally and locally. Demographics provide the data on the composition of a target population, age, race, gender, income, migration patterns, and overall population growth and movement. Interest rates cast a giant spell on a person’s ability to purchase real estate. Falling interest rates create a higher demand for real estate, pushing home prices upward. Conversely, as interest rates rise, demand for housing diminishes as do real estate median prices. Governmental policies and subsidies have a sizable impact on property demand and on prices. Then there is the economy. The overall health of the economy, measured by such economic indicators as the GDP, employment data, manufacturing activity, and the prices of goods, all cast a pall on real estate.
All these factors aside and certainly integral within each of these aforementioned factors is how job growth drives real estate. There is that old adage in real estate: “As job growth goes, so goes real estate.” Real estate investing is all about finding and securing the best deals. Some investors find enormous pay days, hitting home runs with their deals. Others hit singles, some even strike out. In real estate, as in life, it is better, certainly in the long run, to be resourceful and skillful, not just lucky. The skillful investor is the prepared investor, the due diligent investor, the investor who does his homework and acts accordingly. The investor who uses the available data to drive his real estate investing. The investor who recognizes how job growth infuses and drives the real estate market.
All the trends, all the studies, all the reports confirm that real estate growth is powered by job growth and that “the top ten markets are powered by serious job creation mojo.” From Zillow.com, to Trulia.com, sundry Forbes and Wall Street Journal articles, to numerous articles from major newspapers in the Denver Post, Washington Post, and The Dallas Morning News to name several, many say we are enjoying the greatest housing market since 2006. Proof abounds as evidenced by the ten best large real estate markets. In every one of those ten markets, job growth has powered home price increases. Alphabetically, the ten are Atlanta, Ga, Austin, Tx, Charlotte, NC, Dallas-Ft. Worth, Tx, Denver, Co, Grand Rapids, Mi, Orlando, Fl, Salt Lake City, Ut, San Francisco, Ca, and San Jose, Ca. There is no better example than Austin. Today, Austin has the best job market in the country. Every indicator, every source favors Austin as having the most undervalued real estate for its growth projections, closely followed in no particular order, by Tampa, Fl, Denver, Co, Charleston, SC, and the North Carolina cities,of Charlotte, Raleigh, and Wilmington.
Follow the job growth. Always a key to real estate investor success.