An Expert Described the Market as a “Crapshoot” – We Disagree

We came across a CNN Money article the other day in which an expert described the real estate market as a “crapshoot.” He explained that there is no guarantee that home prices will continue to rise, so investing in real estate is essentially a gamble. In a sense, he’s right – market conditions are ultimately unpredictable. But the fact that there are no guarantees in real estate doesn’t mean you can’t make a safe bet.

There are a lot of variables when investing in real estate. For instance, if you are looking for a new construction property and only plan on living there for a few years, your’e going to want to get a great price on it so you can get a good return on your investment. On the other hand, if you are interested in a new construction property where you plan to live for 10-15 years, you don’t have to worry as much about what you’re paying to get the property. Your particular circumstances play a role in how market conditions will affect you.

Another thing to remember is that real estate is local – conditions vary depending on the particular area. If we look at the East Bench area of the Wasatch Front, we have a 4 or 5 month supply of homes. Once we focus on a particular price range things begin to change; under the $300,000 price range we have a less than 4 month supply, whereas for homes over $500,000 we’ve got close to a 5 month supply. The larger the supply of homes, the lower the pressure on pricing – which means it takes longer for appreciation to occur.

So, the article can be seen as overstating something that is pretty much common sense – home appreciation relies heavily on inventory, and available inventory is always changing. But, as we’ve seen, inventory levels vary depending on locale, so a national report tells us little about conditions on the Wasatch front.

Investing in real estate isn’t a gamble. It’s a matter of finding the right agent to help you negotiate and leverage to find an ideal price. Depending on what your goals are for you next move, an agent can help you make sure you find a property that is the right fit so that, when you plan on selling, you have equity to sell.

We hope to be your number one source for real estate information in Salt Lake County. Give us a call or email us any questions you might have about market conditions in your area.