Understanding the situation in the real estate market like a green light on a traffic signal is like a shiny neon sign that says buy or sell now. Perhaps the biggest advantage of real estate investing is that the real estate market is relatively slow-moving and generally easy to trade in, unlike stock, bond, currency trading. Despite the slow-moving quality, many real estate professionals are ignorant of how to accurately measure the market. There is a common saying in real estate that when real estate agents start buying an investment property it is time to sell.
In general, although you have time to buy, sell or hold your investment property, there are some basic indicators. A good indicator of when you should think about buying a property would be job growth or something that can boost job growth like opening a new factory. Also, keep in mind that the same situation can affect different types of property in different ways. For example, an increase in the number of property buyers with a small number of homes on the market means an increase in the price of undeveloped land.
On the other hand
The presence of overbuilding or too many new homes in an area can reduce the price. Even economic factors, such as the increase in foreclosure. Can be a warning not to buy the property or at least be more cautious. There are always exceptions, but you should always have a valid reason to go against the grain of the current real estate market.
Other indicators for rising or fall in interest rates should be noted that affect the value of money and therefore indirectly affect how much property a potential buyer can afford. The presence of a large number of vacancies or discounts of many homeowners, free or property purchases such as new toasters or television sets can also indicate a declining market.
Even a glimpse of the local newspaper can give you a good idea of where the market stands, see the classified section for the number of foreclosures and the number of jobs available. Check the business section and many times even the first page has relevant news for the property investor. Generally speaking, the real estate market is always in one of the following stages, when you understand where it is now and which it was before you can predict at what stage it will be more accurate.
Expansion
As the name suggests this stage define by growth, increased population, increased employment. Wage growth, and of course property prices and rental rates. The danger of this episode. Which is easily the most exciting episode and arguably the most fun. Is that it enters the market with many novice real estate investors. While it may seem like the market can’t go anywhere. You’ll be in a position to take advantage of some great deals in the downturn and downside. Avoiding the temptation to take extra sorrow.
Peak
If your exit strategy is sold out, this is the right time for it. This stage is commonly referred to as the seller’s market. It characterizes by almost insane bidding battles for available property. Hints of new building projects in every corner. One of the best benefits of traveling in this episode is that it characterizes by extremely short list times.
Contraction
The contraction phase is the market response to its excessive price and often a large number of overbuilt features that often exceed the number of actual buyers. Although this stage is often characterized by an increase in inflation. Inflation itself is actually a reaction to the contract market although it can also be a contributing factor.
At this stage, many property owners usually express a feeling of denial which causes prices to remain at their excessively inflated levels which often sends buyers elsewhere. Increases the supply of homes available for sale. Reduces the number of interested buyers.
Recession
At the moment, many properties have been on the market for a very long time. Although property prices fall, rent rates also fall because landlords force. Compete with each other for tenants to keep their property floating. This is usually the stage where the highest number of foreclosures are found.
Below
Due to a large number of foreclosures and foreclosure risk owners who are often willing to provide assistance, more generous terms. Direct owner financing because they will be in an expanded market. This is easily the best way to buy property. This is a stage that most new investors fear because of the deadly headlines and rising interest rates.
Recovery
This stage is basically back to normal. Although interest and inflation may still be a bit higher than the period of expansion they have started to decrease at least a little bit. Typically, at this stage, all additional assets from the expansion. The final stage purchase or re-exploited in the market and new buyers may arrive.
Although being able to identify current trends and predict what the next stage of the real estate market will be. Periodically identifying buying. Selling does not work as a hard and fast rule.
For one thing, there may be a difference between the national and local markets for each national market at the bottom level. There is usually an area that is always at the peak or even expansion stage. The best indicator of whether a property can be bought. Sold in the end is what the analysis of that property reveals. How it fits into your overall real estate portfolio.
Read More: Top and Best Areas for Real Estate Investment in Dubai
