I’ll explain why I think the most important thing about the economy and real estate market trends for real estate investors are the effect they have on homebuyers. Are homebuyers eager to get in now? Are they skittish about some dicey market news?

No question about it, the dynamics of the real estate market have fundamentally changed over the last two to five years in most major markets. But that still doesn’t change the real estate investor’s approach to any market. It’s smart to be wise to the trends, know the market factors and where the market seems to be going. But don’t let the statistics distract you from the basics of real estate investing as it is taught and practiced at StreetWise.

• As we know, one of the biggest real estate market changes is that the backlog of foreclosures has long been cleared out, and tighter lender standards have stopped the foreclosure avalanche. Without the over-abundance of foreclosure listings, buyers have less power to ask for price concessions and hold out for discounted listings.

• But in spite of the price increases most in major markets, many analysts feel certain markets are still undervalued, including Las Vegas, Chicago and Detroit.  Some of the markets where home values were hit the hardest in the foreclosure crisis, dropping from 30% to 50%, have some distance to go with home prices to make up lost ground, even if they don’t return to pre-crisis price levels.

• However, in areas where the foreclosure crisis had the least impact on selling prices, including California and Washington D.C., forecasters are concerned that the market is still somewhat over-valued and may correct even further downward. Homebuyers wise to this prediction may be thinking of waiting for a price drop before committing to a new home.

Remember always that, as flippers, wholesalers and rental investors, we are looking to increase value in a property not based on market ups and downs, but on the value we add with a power tool and a paintbrush. Flippers and wholesalers invest in sweat equity, not the market price trends for 3, 5 or 10 years down the road. Rental investors buy into equity and improve the property, having more interest in long-term market trends to help them decide how long they will hold each rental property.

When real estate investors say we buy at below-market prices, we mean this week’s market! Not the market next year or in 3 or 5 years. Keep that in mind and know what your local homebuyers are thinking so you can adjust your sales tactics to reduce your flip property’s time on the market. Keep moving forward with well-chosen, well-planned projects to succeed in any economy!

What local market trends are encouraging homebuyers in your area?

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