One of the most common questions the novice real estate investor asks is, “Why do We Buy Houses In Massachusetts with the highest average home prices?” This is an excellent question and one worthy of an answer. There are multiple reasons we do this, but the impact of geography on home buying is often overlooked. Let’s explore.
One of the most basic economic principles in economics is supply and demand. In real estate, supply – or the number of homes for sale – is primarily determined by how many people live in an area. If there is plenty of existing property for sale, the number of potential buyers will be relatively low, and the price will be high.
But population growth can affect the demand – or the lack of it – in different ways. Some experts believe that a rapidly increasing population can stimulate an area’s economy. Urban areas are particularly prone to this phenomenon because their growth is based mostly on population growth. Areas with a low birth rate also experience a slowdown in population growth. A city’s real estate market reflects the area’s future needs and not just the past.
The timing of an area’s development can also affect the demand. Areas with the highest population growth tend to be fast paced and offer quick buying opportunities. Real estate values tend to move upward, which makes the purchase of a house attractive. Areas experiencing rapid growth tend to be less desirable, and it’s more difficult to buy a home at a good price. A buyer needs to be patient and take the time to look at the surrounding area and find the perfect property. Buyers can sometimes have trouble finding the property that meets their criteria.
Another aspect of population growth that relates to why we buy houses in the market’s ability to adapt. Areas undergoing rapid development are often forced to adapt to the new, higher values, but the resulting population increase usually entices residents who want to improve the area. In some cases, this causes an overbuilding problem that affects the rental market.
Many factors can affect why we buy in certain areas. Some areas experience below-average population growth, which can negatively affect the housing market. We need to choose an area based on whether or not it will experience above or below average population growth. If an area is below average, it may not make sense to invest in a home there, although buying in an area where homes are above average can sometimes be beneficial.
An area’s proximity to a major employment center can be important. If jobs in an area increase in value, it can appeal to us more than an area without an influx of people. People can also be attracted to a community if the schools are excellent, if major corporations are nearby, or if there is a shortage of crime.
In the end, why we buy houses? Housing markets are complicated, to say the least. But, for many people, location and population growth are key. And, of course, the quality of life many people long for is appealing as well.
Many people feel that they don’t have to buy if they aren’t comfortable with living there. Others think of it more as an investment. The truth may be somewhere in between. Many real estate investments are never sold and gain in value over time. So, while a home may not be your first choice, it could be the right one for you down the road.
Why we buy houses? We do it because the equity in it makes it more likely that we can make a return on our investment. When we borrow against the equity in a home, the lender usually requires a minimum amount of equity (commonly 20%) before lending money. Once the funds are repaid, the loan is considered paid off. It means that the house no longer belongs to you, but to the bank that made the investment.
Why we buy a house? We do it because it is a building that will hold us and our family years down the road. Our kids may grow up and move away. We will all eventually grow up and leave this earth, not having achieved the freedom of living without owning a thing. People who have achieved freedom understand that the home is a part of why we live and why we have homes. It is a place where we come together, a place where we establish bonds, a place where we raise our children and teach them, a place where we receive love and affection, a place where memories of good times will be stored.