HomeVestors Knows That Housing Starts Are Down 15% This Winter

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Investors should take the recent drop of housing starts with a grain of salt when determining the strength of the market. 

Dallas, Texas HomeVestors is the nation’s number one home buying franchise and has helped real estate investors purchase 50,000 properties over the years.  The company knows that housing starts have decreased 15% over the winter and a number of experts are using this as testament of a stalling market.  On the other hand, experts on the other side of the coin are blaming the drop in the number of housing starts due to the inhabitable weather.  Either way, investors need to take a step back and decide for themselves, which way the market is headed.

Since housing starts are an indicator of the relative strength of the real estate market, many use these numbers to predict where the market is headed.  Real estate investors generally like to pursue the market with diligence when housing starts are high because this indicates that consumer confidence is high.  Investors who are searching for an investment property when there are a large number of properties on the market will have more choices and be able to find sellers who need to sell.

Investors who are holding property and looking for a good time to sell it generally do so when housing starts have scaled back.  At times like these, investors have less competition overall and can capitalize from flipping real estate.  Generally, property values will increase when housing starts have stalled for a period of time.  When property values pick back up, a number of construction companies will begin to break ground and capture their market share, forcing property values to even back out.

This supply and demand model is a basis that investors can use to judge the market and make investment decisions.  Before jumping to brash conclusions however, this slow down in housing starts is likely caused by the weather, as the bone chilling cold has sidelined construction workers.  It is best to wait until spring and reanalyze the number of housing starts at that time.

If this lack of housing starts is indeed being caused by the weather, expect that spring is going to bring a peak in housing starts in order to make up for the lack of work over the winter.  If the drop of housing starts is indeed economical in nature we won’t see much of a spike going into the spring and investors can then draw broad conclusions regarding the strength of the market.

Even though housing starts are down significantly, don’t assume that this is entirely based on market factors, as the weather likely has a great deal to do with it.

About HomeVestors of America Inc.

Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties.  Most commonly known as the “We Buy Ugly Houses®” company, HomeVestors strives to make a positive impact in each community.  In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information, visit www.HomeVestors.com.

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