Keep an Eye on That Most Important Investment, Your Home

Posted by Alan Zunec on Tuesday, March 1st, 2011 at 5:26pm.

Most people in North America have the biggest percentage of their net worth tied up in their homes, on average about one third of their wealth. That investment needs looking after to keep it healthy and profitable. There are specific factors that can help you keep an eye on your live-in nest egg.

The demographic make-up of a neighborhood can influence the value of your home. Demographics looks into the ages, genders, average incomes, different races, migration trends and how fast the population grows in a neighborhood. One example of a specific generation affecting housing availability and prices are the baby boomer. These are people born within the 20 years following World War II. As this group reaches retirement, they will start considering their housing options. Some will decide to purchase a vacation home. Others will sell their existing abode and buy something smaller and easier to maintain. Both decisions affect the market.

Keeping track of interest rates is also wise. If rates are low, more people can afford to buy. Mortgages are less expensive. As demand increases, inventory decreases and prices of homes generally increase. Since your home’s value is influenced by the prices of surrounding homes, this can affect the value of your property.

If the economy is healthy, the real estate market generally follows suit. An economy is considered healthy if it has low unemployment, prices for other goods are low and exports are up. All this makes for a healthy GDP, or gross national product. Other governmental policies, such as offering tax credits or other deductions for home purchases also can affect real estate demand and ultimately real estate values.

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