Have you ever heard of the saying that in real estate it is all about location, location, location? In theory it is always best to buy in prime location. This strategy is to guard against the downsize. When people talk about the downside it means what will you lose if things go wrong? We are here to tell you something different. This strategy as outlined below is for the long term. And it is best to act in this real estate market.
Real estate price rise and fall tends to be a function of the overall local market. The price will increase first in the prime area. After a short period when the mass majority can’t afford the prime location they would settled for nearby properties. The price will decrease in the reverse order. That is because when prices fall people who can’t afford the prime area will make an upgrade at that time. Although this percentage of people is very small the vast majority will never be able to upgrade because of the falling value on their own properties. The other source is the existing demand like renters waiting to buy, etc.
For these reasons the price on prime location will remain high even when the market starts to drop. So if you buy an off prime property in a peak real estate market you are likely to pay too much and you are the first to lose money. (More on page 2.)