New investors often pay attention to the “hot” market. These metros show explosive growth (e.g. The Hare) and are frequently listed as the “Number 1 Market” for any sort of criteria. However, hot markets are often volatile markets. And volatility requires you to consider market timing when making decisions. This can be very difficult. Instead, you should look for markets that show steady, slow growth year over year. Predictability (e.g. the Tortoise) is your friend. Use it to make reliable forecasts and steady returns.
Let’s look at Houston. While many analysts are predicting lower gas prices will cause a big problem, the facts tell us otherwise. Houston will still be adding jobs this year, at a clip that will leave many metros jealous.
Dallas is a similar story. Even in a year of record construction, job growth is providing market stability. We spoke last week about market conditions vs. market fundamentals. Dallas is a prime example of market fundamentals overcoming market conditions.
Freddie Mac is a major player in the multifamily sector. They have bet big on the stability of this asset class, and have made healthy profits from this bet. We pay attention to what Freddie says about the sector. While it is not surprising, it helps to hear it from another voice.
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