What Makes A Strong Market? | The Zebra Blog

What Makes A Strong Market?

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When it comes to HOT or STRONG real estate markets, a simple question often asked is “what makes a market strong?” The obvious answer being … DEMAND, of course. While demand absolutely drives people to buy in certain areas there are reasons for that demand and you have to look beyond the current demand to be able to predict whether or not the market will maintain its strength.

There have been areas that have seen sudden meteoric rises in house prices but that rise has ultimately gone away when the initial reason for the housing demand decreased.

For an area to be deemed a strong market long term you have to look further than the current reason the area may be in high demand. For example, some areas experience a STRONG burst because there is a sudden but temporary employment surge. Other areas see increases in their house prices when inventory levels shift downward. Ultimately however for an area to be deemed a STRONG market you have to look past the temporary market conditions and look to other important factors.

What is the current economic climate in the area and what is its prognosis long term? What will the future demand be based on population growth, employment growth and migration? You also have to look at the generational makeup of the area as this does greatly impact what kinds of homes are being sold in that area. For example, in Seattle, Washington the condo market has seen a strong surge due to the fact that many Baby Boomers are choosing to leave the suburbs and move to walkable locations. They want less maintenance, more convenience, and they want to stop sitting in traffic.

A recent report by Auctions.com has listed Seattle at No. 1 on the list of the hottest single-family homes in the U.S. this fall. According to the report they took into account pricing, sales, permit activity, economic growth, job stability, and population growth. Florida was also at the top of the list under Seattle, with Portland, Oregon not far behind.

It is easy to see that Seattle’s strong economy and healthy price increases have been driven by the growing technology sector. This is the same for Portland; the tech sector has been very strong there as well.

So when defining markets you have to look beyond current demand and take the long term factors into consideration, even the issues many areas are having with water conservation will greatly impact housing demand in their areas.

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