2 Things That Indicate Property Values Are About To Fall
Posted on: 8 July 2018
Part of selling a home is knowing the right time to put the property on the market. Unfortunately, many homeowners wait until property values are already on the decline before trying to sell their houses, which sometimes results in them making little to no profit on the sales. Here are two indicators that property values are about to fall in your neighborhood, so you can plan your home sale accordingly.
1. Major Businesses Begin Migrating Away
Commercial churn is normal in any community. Businesses close for a variety of reasons and, in a healthy community, are typically replaced by other companies. However, if major stores are shuttering in your area only to reopen in a new neighborhood a few miles away, this could indicate interest in your town is waning.
This is particularly true if the stores that are leaving provide essential products (e.g., grocery). Businesses typically move because they're losing revenue, and that revenue loss is often tied to a lack of customers. In turn, the lack of customers means the population is dropping (people are leaving and not being replaced by new residents), average income levels are declining, or a combination of both. Additionally, the loss of jobs from the closures can spark an exodus of current residents as those people move to other areas to find employment.
When driving around your town, pay close attention to the type of businesses that are in the area. If the number of closures seems to increase or major brands are pulling up roots, then it may be a sign property values are about to take a nosedive.
2. There is an Increase in Rental Properties
Homeowners hit by deteriorating property values will often sit on their homes and rent them out for a while in the hopes they can sell at a later date when the values increase again. If the dip in market value appears to be permanent, some homeowners will turn their houses into multiunit dwellings (e.g., duplexes or apartments) to maximize revenue.
A sudden uptick in rental properties in and of itself may not be a red flag. Sometimes this increase can also indicate major beneficial changes are happening to the community, such as a major employer moving into the area. However, if nothing of note is happening to your town and you're also seeing a lot more properties being put up for sale, that's a good indication property values are tumbling downward.
For more tips on gauging the market in your area or help selling your home, contact a real estate agent.
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