As a real estate investor, you rely on your properties to generate income. As with virtually every type of investment, how much income you can expect your properties to generate can fluctuate based on the economy. When the economy does well, real estate investments also tend to do well. To get a feel for what you can expect, here are a few key economic indicators real estate investors should look at.

Economic Indicators Real Estate Investors Should Look At: Average Rents

Rent rates have been trending upward for some time now. That isn’t always how it goes though. Rent rates go down from time to time as well. 

There are a few different factors that influence rent rates. If you want to stay competitive and keep your vacancy low, pay attention to the average rent rates for comparable units where you own properties. That is key to finding the balance between making a profit and keeping your units affordable–a must if you want to keep vacancy low.

Interest Rates

Unless you don’t intend to buy or sell your properties, it pays to pay attention to interest rates. As mortgage rates rise (like they did throughout 2022), buyers are less willing to pay as much for properties. They have to pay more in the long run, after all. 

Rising mortgage rates don’t necessarily mean your property values will fall. If you take the time and effort to keep your properties in good condition, or even improve their condition, you can preserve property value. Waiting for interest rates to lower is also a smart move–it can be easier to get a good offer for your property if you decide to sell and makes buying new investment properties more attractive.

Economic Indicators Real Estate Investors Should Look At: Home Sales

Keep an eye on home sales where you have properties too. This helps you get a feel for local market conditions, a key factor that drives property values. Look at the numbers for new construction homes being sold, as well as pre-owned houses being sold. If you notice more new construction homes on the market, that could indicate area growth. Areas that are growing may see real estate values increase, which is usually a good sign for real estate investors.

Don’t limit your focus solely to real estate indicators. Get a broader perspective by looking at economic trends at large. Pay attention to things like job numbers and earnings, especially in areas where you have properties. By keeping tabs on the local and national economy, you can better understand what you can expect and how to best respond to protect your investments and your income.

Did you enjoy reading this article? Here’s more to read: What You Can Do About Rising Mortgage Rates

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