Real Estate Is Cyclical

Real Estate Is CyclicalIt’s true that when it comes to real estate, property investment is one of the safest investments a person can make, assuming that, as with any investment, you choose carefully. A good piece of property can only appreciate with time, though the rate at which that value increases can vary.

On the flipside, there’s also the old adage that “nothing can last,” and while value of carefully selected property investments will always rise, the demand for that property changes based on many variables. For the first half of 2015, property in homes and luxury homes enjoyed some brisk sales and there was a definite boom period and sales of homes clearly went up, while “distressed sales,” that is, homes put on sale usually because of a quick need for funds, or because they can no longer keep up with mortgage payments, went down. This is a good indicator of the overall health of seller’s market.

However, while the sales data was encouraging, the future may show a bit of cooling down. There was a notable decrease in open house traffic, floor calls and listing appointments. All of this may indicate that, at least for the moment, the number of buyers on the market may be in decline, but there are many variables behind what could cause such a drop.

This can mean different things for different people depending on where you stand in the market. A drop in open house traffic and listing appointments means fewer buyers in the market for now. As a buyer, that means there’s less competition, and potentially more likelihood of securing the luxury real estate property you want without worrying too much about competitive negotiations or going to auction.

As a real estate investor or owner, however, this also means that those hoping for a profitable sale aren’t likely to maximize that investment in such a climate. During such cool down periods, it’s probably better for investors to hold off and wait for the market activity to rise again before thinking about selling for profit. 

As with any investment, property is as much about timing as it is about price. For people with different goals, there is a time to buy and a time to sell. For those in the market to buy, this may be the time. It’s just a matter of finding the right agent to steer you towards the right property.

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