For most of us, buying a house is the biggest investment we ever have. Now the house price is very low comparing with the peak price. Itâ€™s a good time for investors to enter the market. But, where should we invest in?
The most popular area? In Bay Area, we know Palo Alto and Cupertino are among those hot areas. They have top schools which attract lots of parents, especially â€œTiger Momsâ€http://online.wsj.com/article/SB10001424052748704111504576059713528698754.html). Even during the slow season, each property may have more than 10 bids and the selling price is usually higher than the asking price. And the average house price in those areas is more than $1 million. Is it a good idea to invest in those areas? We donâ€™t think so. First, itâ€™s already priced in and there is not much value growing space unless the housing bubble comes back. Second, current high prices will add too much financial burden to investors or home owners. Plus, itâ€™s hard to generate positive cash flow if later you want to rent the property out.
If we can find the hidden pearl, the areas with great potential, we can expect a much better returns from the investment. Itâ€™s easy to say but hard to do. How to find the those hidden pearls?
As we discussed early, schools play an important role in housing market. There are so many â€œTiger Momsâ€, especially in Bay Area. Although we may not agree with â€œTiger Momsâ€, we still need to consider propertyâ€™s re-selling values. Therefore, we can pay attention to schoolsâ€™ API trend. For example, take a look at Hirsch Elementary school in Fremont Irvington area, although itâ€™s current API is less than 900, itâ€™s API trend (http://schoolandhousing.com/home/index.jsp?search=address&address=41372+Thurston%2C+Fremont%2C+CA+94538&id=01611766000764) shows that it has great potential to go above 900 the next year. Plus, its overlapping middle school (Horner Junior High) and high school (Irvington High) are all pretty good and the same as Warm Spring Elementaryâ€™s. Current housing price is low comparing with those in Warm Spring area. Thus, this area must have great potential.
API trend can be easily found onÂ http://schoolandhousing.comÂ . Thus, with similar approach, you can find other areas with great potentials.