- The Washington Times - Wednesday, October 18, 2006

Several friends have come up to me in the last few weeks and asked, “Is this a good time to sell my house?” or “Is this a good time to buy a house?”

Let me preface my answer with this: If nobody panics, we’ll all get out of this alive.

Many readers accuse me of being too optimistic on the real estate market. What they see as optimism is actually an attitude steeped in the belief that you can make money in real estate in any market. You just have to know how to operate when the market’s moving up, leveling off or cooling down.

When prices are up, sell. When prices are leveling or dropping, buy — or sell.

When rents are moving up, don’t play Mr. Charity. Raise your rents. When you enter the real estate field as a wealth-building business investment, that’s exactly how you have to treat it — like a business.

When the market shifts, that’s OK — if you’re looking at the market as a way of making money and building wealth.

Thus, when I read some recent reports from federal agencies that appreciation had slowed, I didn’t panic with many of the market prognosticators. I just shifted my business plan. Real estate investors and property owners can make money in any market. You just have to be wise and be flexible.

Consumers definitely are confused as to whether they should buy a piece of property when many numbers are pointing at a housing market that is slipping in prices.

Today’s tip is to approach it from an unemotional business perspective.

Watch these segments of the economy in your local area to determine if you should buy in your market.

• The local economy. Are jobs growing? Are businesses opening? Are current businesses investing in themselves? What are the economists saying in your area? Research this data by a simple Internet search of “‘your city’ economic report.”

Through that search, the astute investor will find out where economists are predicting growth in suburban business centers and where the jobs are coming and going.

Forget what you’re hearing nationally and look for the growth on the local level where you want to buy a house. Just like politics, real estate is local.

m The local real estate market. Are prices booming, leveling or slipping? This has to be researched on various levels. Start on the state level, drill down to your county and then get a granular look at the ZIP code and community level.

These numbers can be found easily through your local Realtor association. For a list from across the country, start at www.Realtor.com and click the links to local real estate associations at the bottom of the page. Most local associations and state groups keep a public area on their Web pages with statistics on the number of homes sold, sales prices and year-to-year appreciation.

Look up government information as well on job growth, economic plans and forecasts. If the state and county governments are playing their role appropriately, they’re creating jobs and allowing development of housing to house the workers who come along to take those jobs.

If they haven’t come up with the latter, you might have a good investment opportunity on your hands. More jobs and fewer houses spell lower supply and higher demand, meaning equity growth and high rents.

Don’t forget the rental market. Is it growing? Are there a lot of vacancies? How much are the rents going up or down? If rents are up, you may be able to cover your monthly expenses. If they’re dropping, it could be because the location is down economically or because housing is so affordable — but appreciating — that renters are getting out of the rent track and buying houses instead.

• The financial market. This actually is the only real estate component that usually is measured on a national basis. It’s all about the cost of money. Most interest rates are within a basis point or two of each other nationwide. They are still historically low — less than 7 percent.

If you find that the local economy is chugging along, the local real estate market is still affordable and financing also is affordable, buy, buy, buy. A strong economy with a growing real estate market and strong rates means you can buy a house for relatively little money down as an investor, put a renter in the house and obtain it with cheap money that the rent will cover.

If you find you’re in a positive local economy but local real estate is unaffordable and financing is still affordable, you may need to wait or jump in the flow before real estate gets even more unaffordable.

If the local economy is great, real estate is leveling and financing is still affordable — and the local economy looks as if it’s going to keep growing — buy while you can, because real estate is going to move up right after the break.

Finally, get a team together to help you analyze the data you have just researched. Are the prices trending upward, and if so, is that really a good thing right now? Or are the prices dipping, meaning you should get in while you can because the jobs are coming?

Work with your agent, lender and accountant to figure how the market can help you with your wealth-building goals.

M. Anthony Carr has written about real estate since 1989. He is the author of “Real Estate Investing Made Simple.” Post questions or comments at his Web log: (https://commonsenserealestate.blogspot.com).


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