Is There a US Housing Market?

A recent article in US News and World Report observes that the upswing in the US housing market is largely being fueled by a corresponding upswing in employment rates. As more people are able to find jobs or return to work after long layoffs, the story states, they’re more able to form households, purchase homes, or afford to pay more in rents. But analyses like these offer only broad generalities about the state of housing across the country. The “housing market” is really not a national entity, but many regional and local markets, each with its own unique set of features, some more positive for investment than others.

Income property investors heeding Jason Hartman’s advice to diversify their assets in different markets need to consider each area on its own merits, evaluating the market’s profile relative to those larger national trends. Factors causing a downturn in one area, for example, may be responsible for an upswing in another. Employment rates are in fact among the elements contributing to a market’s investor friendly profile, but other features also play a role.

A diverse employment picture spells good news for investments. The “company town” where one or two large employers account for most jobs poses the risk of a housing collapse if that company or industry falls on hard times or is forced to close, driving employees elsewhere and creating casino online high vacancy rates that won’t improve if the company can’t get back on its feet.

Stable families suggest a fairly positive employment outlook, too – and that can mean tenants able to make the rent and take reasonable care of properties. One clue

to family stability is the state of local schools and school districts. Flourishing schools, well funded, can indicate whether an area is stable or growing, as families placing children in schools generally plan to commit to the area for a longer period and become a part of the community.

Trends in future enterprises can suggest whether a market is risky, or a prudent place to invest. Areas expecting growth from future projects such as new construction or business activity could see a boom in housing as new workers relocate. Ambitious commitments in nearby areas could also suggest an upswing as new workers search for housing within commuting distance.

Because local and state housing statutes can vary widely, landlord tenant laws in local markets can be either tenant-friendly, or landlord-friendly in terms of housing codes, lease agreements, and issues such as eviction proceedings. For that reason, the amount and kind of local regulations governing rental housing in a given market also play a role in determining whether that market is appropriate for investing.

“All real estate is local,” says Jason Hartman. The US housing market is really many markets, each with its own set of desirable and not so desirable features. And for the prudent investor seeking to diversify assets in various areas, it’s important to see each one as an individual market, uniquely local and subject to change. (Top image: Flickr.RonHenryPhotography)

The American Monetary Association Team

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