Real Estate Market Cycles Explained
Real estate market cycles come, and real estate market cycles go, but are you curious at all about how to use an understanding of current market conditions to make money in real estate investing?
I have been discussing the formation of a real estate hedge fund (or reit) with investors for the past few years, and we all finally agree that times are very favorable for growing positions in residential real estate holdings. This conclusion was not a "gut feel," rather it was determined through the scrutiny of real estate supply and demand and the current phase of the housing market cycle.
Real Estate Market Cycles Are Local
Believe it or not, there are some housing markets around the world which sport real estate market cycles that are almost as accurate as a clock!
If you take the time to graph home sales and current real estate inventory over time, the cycles just jump off the page.
Now some markets are prone to boom and bust due to the nature of the local employment drivers (meaning demand is not as predictable), but there are some more-stable economies that make forecasting real estate market cycles a whole lot easier.
In the real estate graph above, we see a very consistent seasonal fluctuation in the supply of homes for sale in Tallahassee (red), and unit sales are finally starting to rise. This is a signal that we are in the real estate investing "sweet spot," where values are still declining in most price ranges due to oversupply, but the number of sales is on the rise (indicating increased demand). Shortly, this will result with real estate appreciation returning to the market.
If you would to know more about using real estate market cycles to help with investing in the real estate market, just drop me a note and we can schedule a time to discuss your specific needs and wants.
*Joe Manausa Real Estate is a brokerage company headquartered in Tallahassee, Florida. Its unique business model provides specialists to both home sellers and home buyers, and the results speak for themselves. JMRE has significantly more 5-star reviews on google than any other local competitor. Joe Manausa Real Estate is a leader in internet marketing and utilizes search engine optimization, email marketing, social media and data analytics to get their clients’ home sold faster and for more money than any other Tallahassee brokerage firm. For more information, visit www.manausa.com or call us at (850) 366-8917.