There are a number of trends that can affect real estate prices so you need to be aware of them if you expect to make a profit.

Think of trends in terms of geography. There are four levels I want you to consider. The first level of trends is the local level. Is the neighborhood getting better or worse? Are there some new developments going in nearby? If so are these attractive developments such as new restaurants and stores or nice house, or are they undesirable developments such as a landfill or an industrial park. Are people moving into or out of the neighborhood and is the neighborhood dying or revitalizing? Think of these trends when you look at a neighborhood before you decide to buy. Even within the same city there are areas that will prosper and others that will wither. It is common to see the commercial shopping area to shift from one part of town to another over the decades. Another thing that you should look into is real estate tax. If the local area is having a hard time meeting budget obligations, they may decide to raise real estate taxes and this will make property in the area less desirable, so try to get an idea of where property taxes have been in the past, where they are now, and where they will be in the future. Be conscious of these trends and you can get in a good local area that is on the up and up.

The second level of trends is the city level. Is the city prospering? Are new employers, manufacturers or other businesses moving in or moving out? Are young people staying around or are they moving on to other places? Is the city growing or shrinking? What are the long and short term trends for the city? If you are hoping to do well in real estate investing, not only do you need a neighborhood that is rising but also a city. Some cities have grown tremendously during the past decade, but you need to analyze a city before you decide to buy. In some places two cities just twenty miles apart can have completely different destinies. Over the years it can mean that one of those cities will have a great real estate market and the other will be down and out.

Here you have seen the first two geographical levels of trends that can affect your real estate investment. Read on in Part 2 to see the other two levels explained.

Written for Richbitchitch.com by Rick Hyland