Things To Consider Before Investing In Real Estate: The Housing Market Cycle

Housing Market Cycle

The housing market is constantly in change, so it’s essential to know about the phases in a housing market cycle to make a wise investment. Interest rates, employment, income, the economy, and weather patterns are a few aspects that affect the market. Changes to these factors can impact how much people want to buy or sell homes in a specific area of the country.

Three Patterns Seen In A Housing Market Cycle

The housing market cycle is constantly changing with new trends and developments. The following are three patterns seen in a cycle:

  1. When demand for housing increases, it causes prices to rise as well.
  2. A high supply of homes will decrease their value and cause prices to fall.
  3. When interest rates increase, the value of the home rises.

Things To Consider In Housing Market Cycle

●       Duration Of The Cycle

If you want your house sold before you retire, it will take at least eight years before your dream comes true! The average time to sell a home in the United States is about seven years. According to Zillow Real Estate Research, the average time from listing to closing on an existing home was four years in 2018.

The average time between when someone buys their first place (which can be as long as 40 years) and when they move into their next home can be anywhere from 2-15 years, depending on the residency and how much money they make or don’t make.

●       Sometimes The Market Can Miss A Phase.

This can happen when a downturn in overall economic activity or structural changes in the economy make it difficult to sell homes at their current values. For instance, if you’re looking at buying a home now, consider this scenario: your local housing market has been overheating for several years, but recently it has plateaued or even dropped slightly below its peak level.

The drop may be temporary and will likely reverse once buyers become more confident about their ability to purchase homes again, so if you want to buy before those changes occur, then now might be a good time! If not, maybe the upcoming year will be better because one won’t know until then.

●       Fluctuation In The Market

The housing market is cyclical. When one home price goes up, all homes will follow. The same is true in reverse order: when a home’s value declines, it makes sense that other expenses will follow suit. The housing market is evolving, and changes are constant, but you can use this knowledge to your advantage by knowing how your investment might react to certain factors at different times.

●       Logistical Importance

When considering whether or not to buy a home, it’s essential to understand how the market is in its cycle. If you can afford it and know it will provide comfort and stability for years ahead, it is essential to look at all the logistics. When deciding on whether or not buying now makes sense for your situation, consider this? How long is one looking? How much money does one have available right now? What does one want out of their new home?

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Conclusion

Understanding the different phases of a housing market is necessary for intelligent decisions about which home to purchase. If you want to buy a home in the future, you must know in which phase the market is, so it’s recommended that you research online or through local real estate agents.

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