l Changes in local government codes and regulations.
l Business and industry moving in or moving out of the area.
l New subdivision, shopping centers or other major construction projects
l Movement between areas, causing some to grow while others stagnate.
The fact that you live in the area in which you invest is your greatest information asset. You can keep up with all of these and other factors that will determine where home prices will go, and where rentals will be in demand. However, there is no substitute for a very thorough knowledge of your market from the larger area and national perspectives.
Changes in mortgage rates, federal home related laws, and other issues with a national scope can have a dramatic impact on your local market. Even if the influences are subtle, the wise investor will keep up with the big picture. There are two widely utilized home price indexes that track on national, regional and even urban area levels.
Both of these home price index services have been around for many years. You can get a clear picture of the history of home prices over time from both. Their methods of computing the indexes differ, so they don’t always look alike. They both have a national composite index, with the Case-Shiller tracking 20 MSAs (Metropolitan Statistical Areas) on a regional basis. The OFHEO goes into a great bit more detail, tracking many cities and smaller areas around the country.
Most real estate investors would be well-served to keep up with these indexes at the national level, as well as the regional or city level covering or closest to their investment area. If you are doing your local research well, these are just another tool in your investment toolbox. Ultimately, you will use them to add perspective to your local information and decision process. After all is said and done, real estate is local.