NoNameProf

A friend of mine told me that his 2 million dollar residence in NJ has appreciated a paultry 3% over the last 7 years, it was certainly well below the average of the stock market investment. I understand historically real estate return is quite low, despite the recent run up in hot markets like CA, DC, etc.

How can you make substantial return in real estate market? I think a person should never look at the average, it does not matter. What matters is supply and demand. If you have a UNIQUE property to sell, all you need is ONE buyer who is willing to pay a lot for it. It is relatively easy to identify whether a property is unique, but how can you anticipate someone will come along and pay a lot for  it later? my sense is to try to identify the target segment (who will likely to buy), understand their preference and behavior, and try to forecast where they want to buy their property next. For example, many folks have made substantial money investing in beach properties, where should they put their money next?

Also it is clear the price of a single house residence will level off, if the target buyers are salary earning. So investing in such property will unlikely yield much if the market is already hot. There are not many people out there making $300k+ a year.