How to tell if a single property is in a renters or buyers market

[Yusuf Sarii]

(SINGLE FAMILY)Basically I just want to know how to tell if the investor is more likely to be just rent the property with not to much renovations or renovate it and resell.

I would think properties in metropolitan areas that have basic arvs(outdated a little) to be in a renters market

And the opposite for buyers market (suburbs and new renovated arvs).

I know most multi families are going to be rented but this question is more towards (single family homes.)

[Dan Maciejewski]

For sales:

To tell if a property is in any type of market, you will need to know the recent history of the market, and then extrapolate into today and the near future.  There are a bunch of things to look at (DOM going up or down, cash sales vs financed, types of financing, closed sales going up or down, new inventory going up or down, average & median sales prices trending up or down, etc. . . ) and you'll want t o look at these for each market segment you are interested in.  DO NOT look at the market as a whole -- luxury sales will skew average sales and average sales will skew lower priced sales.  Distressed should be separate from flipped should be separate from "careworn," . . . 

To tell about a buyer's/seller's market, absorption is a really easy metric to use.  This is closed sales divided by active listings.  My market (overall) has had absorption halve from a year ago, so you could say we are trending crazy into a buyer's market.  But in real numbers that's 114% down to 63%.  That's still a crazy strong seller's market.  22% is a seller's market

Also, "months supply of inventory," which is related.  This is how long it would take to run out of inventory if nobody lists a house.  If you're in a very seasonal market, you'll want to account for seasonality.  My market looks like it has 35% less inventory overall than a year ago.  we are down from 1.7 months to 1.1 YoY.  You do need to dig into your target price point and house condition to be really accurate, though.  Just using price point should at least get you an overall average.

For rentals: (it's a little harder because there's no 1 source of rental data. Some people use only word of mouth, some use the MLS, some use FB marketplace, some Zillow, etc. . . )

I pick my target tenant (say, affording a nicely appointed 3/2 pool home near ____) and look across a few platforms to see what's available.  If there's a ton of nice things to choose from, you can say you will need to compete on price or amenities or something.  If there's almost nothing, then you can say its a landlord's market and you can maybe push rents a bit.

You can also track trending cap rates in your target market segment, as well.  

Again, it's better if you start tracking your target market segments and then you can see trends.  A snapshot isn't as useful as a 4D trending picture.