By the end of this article, you will learn all the factors affecting the real estate market. And how do demographics affect real estate? You will get the demographic factors data that help you to make proper decisions. Make the most out of your rental property.
In the article, I going to discuss the main factors that are completely beyond your control ( of a landlord.) These factors have a dramatic effect on how well your rental properties in Oklahoma city perform.
Factors Affecting the Real Estate Market
Let’s face it, there are factors that are within a landlord’s control. Like rental property upgrades, you can make to your rental property. But some things you can’t change.
Neighborhood: Location Affecting Property Value
I hate it when I hear something like “this property, which is priced in area X would be worth 5 times as much if it was located in area Y.”
These are houses and small apartment buildings, not mobile homes. They are where they are.
Owning a property in a war zone
If the location of your rental property in Oklahoma City is a war zone, there isn’t much you can do about it. You can make the changes I discussed above to make it as desirable property as possible. But it might never be a good long-term investment because of location. Even a good property management company may not be able to overcome this. This is one of the huge factors affecting the real estate market.
Note: Reasons to Invest in Real Estate Market
The most blighted area in Oklahoma City right now is the northeast part of the city. I own and manage numerous properties in this area. Some of those houses are definitely within war zones. Some of those houses have had quite a bit of vacancy. I have sold some of those properties via owner financing to other real estate investors who are just getting going.
You might feel trapped in a perpetual cycle of fixing up a property. As your tenants move out after living there for 6 months or less, you might start thinking about cutting your losses. No matter what you do, some rental properties in Oklahoma city are just not going to stay occupied. You might just have to sell it and try to make the best of a bad situation.
The first thing that you will run into with the cut-and-run approach is that no one else may want the rental property either. You might have to take your lumps in terms of price. However, you might consider selling the property on owner-financed terms.
This should be your last resort. As an owner, I have come to this conclusion on a few properties I’ve owned, but it hasn’t happened very often.
Demographic Factors Affecting the Real Estate Market
Demographics are quantifiable characteristics of a population. They include characteristics such as age, race, and income.
For example, the demographics of the Oklahoma City metro area are summarized here.
Over the long term, the demographics of neighborhoods change. This can have an obvious effect on the demand for rental properties in Oklahoma City.
An Example of Demographic Factors Affecting the Real Estate Market
Over the last 20 years, the Hispanic population of the south side of Oklahoma City has increased. The southwest part of the city is an excellent area to buy rental properties in Oklahoma City. Many of our property management clients are buying properties in southwest Oklahoma City.
Obviously, a demographic trend like this is obviously nothing you are going to change. You simply must accept it, and develop your investment strategy around those trends. Don’t hold onto a property thinking that at some point the neighborhood is going to turn around if the demographic trends are in the opposite direction.
If you have questions about specific neighborhoods, call me.
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Government Policies Impact on Property Prices and Demand
Government laws and policies affect the real estate market. It drives property pricing and demand. Tax credits, deductions, and subsidies are some ways that government can temporarily raise demand for real estate, as long as they are in place.
Being conscious of recent government incentives can help you resolve the changes in demand and supply. It helps you determine potentially false trends.
Note: Key Real Estate Market Reports Your Property Management Company Should Provide
An Example of Government Policies Affecting the Real Estate Market
in 2009, the U.S. government launched a first-time homebuyer’s tax credit to owners in an attempt to jump-start home sales in a slow economy (only those who purchased homes between 2008-2010 are eligible).
According to the National Association of Realtors (NAR), this tax incentive alone led 900,000 homebuyers to buy homes.
This was quite a huge boost, although temporary. Without knowing that the increase was a result of the tax incentive, you may have ended up assuming that the demand for housing was going up based on other various factors.
Note: Simple tips for real estate investment for beginners in Oklahoma
The Rise in Interest Rates Lowers the Demand and Pricing of Real Estate
If you’re buying a property with a mortgage loan, keep yourself updated with the interest rates using a mortgage calculator. Fluctuations in interest rates can influence a person’s energy to buy a residential property.
The lower the interest rate is, the lower the cost to obtain a mortgage to buy a home. This leads to a higher demand for real estate, which again drives prices upward. As the interest rates rise, the charge for mortgages increases.
Thus, this lowers the demand and prices of real estate property. So In this way, Interest rates affect real estate market value.
Get to know why is rental cash flow important.
Economic Factors Affecting the Real Estate Market
The economy is one of the key factors affecting the value of real estate. Simply, it depends on economic health which is ranked by economic indicators such as the GDP, the prices of goods, employment data, and more. That means, that when the economy is slow, so is real estate.
However, the periodic change in the economy can have varying effects on different types of real estate.
Note: Real Estate Investing Strategies for OKC real estate investors
An Example of Economic Factors Affecting the Real Estate Market
The tenants generally have longer-term leases that can’t be changed in the middle of an economic downturn. You have to be aware of the part of the cycle the economy is in. And be conscious of the real estate property’s sensitivity to the economic cycle.
If you are looking for a trustworthy property management company in Oklahoma City that can handle your rental properties and make steady profits, OKC Home Realty Services can be your right choice.
