Median Home Price Hits $200,000 for the First Time in HISTORY

As with any type of business, higher demand for homes usually means higher prices. Reflected by data collected by Zillow, the median home price has broken a record. As home and rental prices tend to always be connected, here is a look at how this news affects commercial real estate.

The median home price is now over $200,000, and continues to increase even since January. Sales prices across the U.S. have been driven up as buyer demand grows with less homes on the market. While some sales areas have slowed, the number in general is expected to keep rising.

How does this affect the commercial real estate market? The median rental has also risen across the country, especially in many large cities along the west coast. As the demand for housing and land continues to grow, commercial property owners are able to raise their rental rates. This makes investing in commercial properties more attractive, particularly in light of expectations for continued price increases.

While it seems that there is always breaking news about the economy, investors should keep an eye on the locations that are seeing the highest demand. Even though commercial property leases tend to be longer than residential, it pays to have that steady rental income no matter how the residential housing market is going. If you can get a good deal on an investment, you’ll likely be able to experience the effects of the current trends and a potential return if the property value increases.

What makes a property value increase for commercial properties? Land is not like most commodities where more can simply be produced, so it creates higher demand. This makes the business incredibly competitive at times, but it also provides incentive to learn the ins and outs so you can realize the greatest success. Property values increase in conjunction with demand. This is why rent is so much higher in bigger cities where tenants are willing to deal with higher prices.

Rising value can also be affected by the investor and owner making improvements on the property. Many new owners oversee renovations or additions to make a property more attractive to potential tenants. While this process can result in a high initial cost, it may be worth the opportunity to charge higher rent. If you’re a commercial real estate investor or are thinking about becoming involved, always be aware of how the current economic climate can affect your investment plans for better or worse.

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