Investing In Undervalued Real Estate Markets: You Need To Know Story

Investing In Undervalued Real Estate Markets: You Need To Know

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Of course, finding undervalued housing markets can be challenging. Doing so requires comprehensive knowledge of what makes a market undervalued.

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What Is an Undervalued Housing Market?

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There isn’t necessarily a formal, scientific definition. However, the housing market is generally undervalued based on the home price-to-income ratio.

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If home prices are low but income is high, you will have a lower percentage. The lower the ratio, the more affordable the housing.

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An undervalued housing market can be defined as areas where the median housing payment to family income ratio is lower than 30%.

The 30% number fits in well with the 50/30/20 budget template, which stipulates that one should spend at most 50% of the income on needs, including housing.

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