The first section of the newspaper you should open to…
A lot of us who are both interested in buying and helping sell real estate appreciate the section of the newspaper on the weekends which lists latest properties for sale and other interesting tidbits of local housing info. However, the first section consumers and supposed “experts” in the industry should actually read the business section from the front page to the back. Why? The business section tells you what companies are coming and going, what companies are booming and which ones are busting and most importantly, it is the true pulse of what drives every real estate market.
Without companies employing people, there is no income to pay off those huge mortgages. As written already, the income of the average individual is the most important or one of the most critical indicators that real estate trend watchers should truly pay attention. Simply put, without purchasing power, there is simply no activity and the neighborhoods, no matter how beautiful and enjoyable to live in, won’t have any activity if everyone in the local economy is getting laid off.
Case in point: we’ve seen San Francisco real estate prices rise like the average temperature of the whole world. Global warming in prices has been very apparent in the Bay area. When the median home price in a city is $822,000 (San Francisco), something is going on with the local economy to support the average mortgage payment of $3171 a month. When you have MUST have a minimum income of about $49,468 annually (so you can pay the tax man) just to pay the mortgage payment ONLY — haven’t even thought about food, utilities, and the major car expenses — you better have some companies paying very well. And for companies to pay well, they need to sell lots of the stuff they sell. Where are you going to read all this? The business section. Shall I say more? Do we know where we should read first?!?