REAL ESTATE CYCLES

In the business cycle of real estate, there are buyers' markets and sellers' markets...and some markets in between.  It is all based on supply and/or demand. 

A BRISK ECONOMY

A SLOW ECONOMY

Then, for one reason or another, the economy slows down. Companies lay off employees and consumers are more careful about where they spend money, perhaps saving more than usual. As a result, the economy decelerates. When there are fewer people in the market to buy homes.

During such a time, fewer people are buying homes. Even so, some homeowners find themselves in a situation where they must sell. Families grow beyond the capacity of the home, employees get relocated, and some may even find themselves unable to make their mortgage payment - perhaps because of a layoff in the family.  

SUPPLY AND DEMAND CYCLE

During sellers' markets, homes sell quickly and sellers have a lot of pricing power.  As a result, prices rise more rapidly than at other times.  During buyers' markets, homes may sit on the market for a while before selling, so sellers become more flexible and may even drop their prices.

THE INTEREST RATE FACTOR

One problem with attempting to time your purchase to the business cycle is that even experts have problems accurately predicting the future economy.  Even when they can, the real estate market does not necessarily move in tandem with the stock market or the economy as a whole.  Part of the reason is interest rates.

When the economy is doing well, interest rates are generally higher.  The result is that fewer people can afford houses.  When the economy slows down, interest rates fall, the "affordability index" moves up and more people can afford houses.

BUY AND HOLD

YOUR QUESTIONS ANSWERED

Want to get a clear and up-to-date picture of the current real estate market in your area?  Call me at any time.  I am happy to share my knowledge of the real estate market with home owners and prospective home owners who want to take advantage of market trends to buy and/or sell wisely.