Winning and losing in real estate is determined by residential and commercial prices. Let’s focus here on residential prices.
One definition of a real estate winner is one who buys a property at a low price and sells it at a high price. A definition of a loser in real estate is one who buys a property at a low price, sells it at a low price or buys high and sells low or buys a property at any price and sells it for less than the purchase price.
No one wants to be a loser…no one wants to buy a property, fix it up to flip or buy or hold and then discover that the home-price growth for that property in that location is slowing, right?
Therefore, another way of being a real estate winner is to focus on generating the biggest return on an investment in terms of yield. For example, you may have a client who wants to invest in (buy) a property with the goal of generating a large sales or rental yield. Where and in what hyper-localized market would it make the most sense to buy a property to get the most out of that property in terms of yield?
House Canary, a company that builds comprehensive real estate data sets, looked at some 380 metro areas in the country to determine just that…which areas in the country may be expected to have the most potential in terms of positive yield.
As most all real estate experts predict continued but slower price growth during 2018, House Canary used metrics such as affordability, home sales, home price growth, mortgage rates, taxes and less predictable geopolitical events in order to forecast accelerated or slowing home-price growth.
The three metros out of +380 metros expected to have continued growth rates AND positive changes in growth rates are Scranton, NY/Newark (NOT Manhattan) and Toledo. All other metros listed below show continued gains in home price growth BUT much slower and/or diminishing rates of growth. (To see exact numerical standings of the metros listed below and all +380 metros, go to www.housecanary.com)
Metro Area Expected Growth Change in
Rate Growth Rate
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Scranton 3.4% +27%
NY/Newark 5.3% +19%
Toledo 5.1% 0%
Seattle 4.3% -11%
Dallas 8.1% – 22%
Los Angeles 4.9% -32%
Las Vegas 6.9% -32%
San Jose 5.4% -39%
San Francisco 5.8% -39%
Miami 4.4% -49%
House Canary determined that the elements causing this slowing of home price growth include…
Affordability in appreciating markets
Waning home sales and prices in specific price segments
Likely increases in mortgage rates
Tax implications
General uncertainty about financial future
