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Research is a crucial component of buying in today's market

September 04, 2009|By ELLEN JAMES MARTIN

Though the overall economy has yet to recover, property values in some areas have held up remarkably well in recent years, which can surprise people who plan to buy in one of these communities, real estate specialists say.

"High-demand neighborhoods are places where buyer interest is growing, yet housing inventory is limited. They're relatively few in number, but these places do exist -- even now," says Leo Berard, a real estate broker and charter president of the National Association of Exclusive Buyer Agents (www.naeba.org).

Despite the overall unemployment rate, some communities still have positive job growth and continue to attract above-average home-buyer interest, according to Berard. He cites three kinds of areas where the employment base remains a magnet for buyers. These include places with prominent institutions of higher education, expanding medical facilities or a growing federal government workforce.

Fred Meyer, a real estate broker and consumer advocate who sells property in Cambridge, Mass., says some college-oriented communities, like his own, remain strong magnets for home buyers.

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"People who work here or wish to live here for the cultural attractions can't substitute this for any other place," he says. "And buildable land here is very limited. That's different than, Phoenix, for example, where you can construct homes as far as the eye can see because the land is much less limited."

Meyer thinks this could be a prudent time to buy a home, even in an area where prices have remained firm. But he says buyers should thoroughly research any area of interest before making a bid.

Here are pointers for those considering a real estate purchase in the near future:

o Start with a scholarly approach to neighborhood selection.

Nowadays, many prospective buyers fear overpaying. However, Meyer says this shouldn't stop you from proceeding toward a purchase, assuming you and your real estate agent have a handle on recent market trends in the area where you'd like to buy.

"Statistics can be very revealing about the direction of a neighborhood, so long as you look at the right numbers," he says.

He recommends that before making a bid, you study local list-to-sale data for the last six to nine months. These show the difference between asking prices and selling prices. If this gap is narrowing, the local market should be stable or gaining strength. If it's widening, the market could be weakening.

Another key set of statistics that Meyer uses is "days on market." If many properties in the community are languishing unsold for weeks or months, it's likely that real estate demand is weakening. But a quickening pace of home sales could suggest the opposite.

o Canvass an area of interest on foot.

Even within a neighborhood where demand remains strong, some properties will be better bets for future appreciation than others. To spare yourself problems on a future sale, Meyer recommends you avoid buying a property that seems out of character in its neighborhood setting.

"I call these 'incongruous houses' because they don't fit in architecturally or they tower over other houses on the same street in an unattractive way," he says.

How can you determine if a particular property is out-of-context with its surroundings? Meyer says you're better off making such judgments on foot than by simply driving through a neighborhood.

"You miss a lot when you whiz by in a car," he says. "It's better to get out of the car and stand squarely in front of the house you're evaluating."

o Don't overpay whether you're buying a starter home or a palace.

In the current market, some of the most heavily discounted properties are those in the top 10 percent of the value spectrum, Berard says. On the other hand, he says some of the highest demand markets are starter communities, where interest among first-time buyers is strong.

Even in a popular community with entry-level homes, Berard says you're not likely to encounter rival bidders for the same home unless an exceptional property enters the market at a deep discount. But if you do, set a realistic limit on how high you'll go to beat out the competition.

"Through your preliminary research, you should have a good feel for the true value of the property," he says. "So before making your offer, promise yourself you'll make no bid higher than that."

o Factor in your emotional reactions.

Though Meyer emphasizes an "intellectual approach" to property selection, including a statistical analysis, he says "a good real estate choice represents a medley between the objective reality of the market and your personal lifestyle preferences."

Through his 46 years in real estate, Meyer says he's discovered through experience that many home buyers would do well to take their instincts into account when selecting a property.

"Buying a house is like picking a beautiful piece of art," he says. "If your whole being tells you you want the house, you've probably chosen well."

To contact Ellen James Martin, e-mail her at ellenjamesmartin@gmail.com

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