[quote=carlsbadworker] . . . I am wondering if the real estate experts on this site could tell us what is the best reliable indicator of the future home price appreciation?
I mean, anyone knows that cheaper is better, buying at 100x rent is better than 125x rent, but that’s from the perspective of investment safety (helped by the rental yield). If we don’t rely on the fuzzy term such as “location”, what is the best indicator for price appreciation? Job growth? Active/Sale ratio? Depressed seller ratio?[/quote]
carlsbadworker, I have an opinion on this for “coastal SFRs” (within two miles of the coast and NOT on the US/MX border). I think appreciation there is fueled by THOSE THAT CAN PAY for properties there and what THOSE THAT CAN are WILLING to pay. It has NOTHING to do with availability of jobs or rental yields. Under a normal lending environment, when interest rates are favorable and THOSE THAT COULD NOT pay are flushed out of their (former) coastal properties they should have never purchased in the first place (there really weren’t very many of these people to begin with), THOSE THAT CAN PAY set the comps. Things like relocation and divorce happen to them but do not affect them as much as those in other areas. For instance, in the case of divorce, each party just lives in a separate property and each quit-claims a property to the other as many in this category own two or more properties.
In addition, coastal view, location and how that view is maximized through remodeling play a large part in appreciation, not particularly “size” or “square footage” as some Piggs might think.
For instance, foreign investors and/or prominent new residents from out-of-county aren’t likely to purchase residences in Allied Gardens but they might do so in LJ or DM, driving the comps only in their desired areas.
In short, wherever is desireable to the folks with the resources (read: infinite choices) are the areas that will appreciate most over the long haul. This segment is not dependent upon the job market, commuting time or quality of schools. They can send their kids to school AND COLLEGE wherever they wish.
Piggs are free to attack me for “fuzzy logic.” Based upon my own experience, that’s how I see it.
What drives the appreciation of rental property? I’d have to think a little more on that one. Perhaps there is a REIT investor Pigg that could comment here?
