Real Estate Market Cycle

Learn This Theory and Success Will Follow

Knowledge about the real estate market cycle can be a powerful tool to better help you understand real estate trends

Use this powerful tools as a guide when you are buying or selling property. Smart real estate investors will have an edge when they have access to future market trends, because it keeps you from staying in the market too long.

Real Estate Market Cycle Knowledge Can Make You Rich.

The real estate market can be risky for the un-informed. One of the primary pressures on real estate today is the Financial Markets. The last few years have proven this to be true.

The Good News Is... When you understand the market cycle theory and pay attention to what’s going on in the financial markets it provides you with a road map to future real estate values.

One thing we have noticed is that price swings are occurring about every 18 years.

This has bee true for over 150 years real estate cycles except during World War ll the cycle was interrupted,but it has been following the same pattern every since.

Real Estate Market Cycles are not all world wide affairs. Many times they may only affect a city, maybe a state or an entire region.

Looking back to 1998 the real estate and stock market had been going up everyone was getting rich on the Dot.Com Boom...

Times were good until someone figured out most of the Dot.com's were not making any money. It was all hype... BOOOOOM...the party was over.

During this same time period the Good Old Boys on Wall Street had figured out how to package Sub Prim real estate loans and sell them to investors as AAA rated securities.

Then they found stock analysts that would give a triple AAA rating on a package of sub-prime loans. Something should have given the investors a clue. Sub-Prime/AAA rating, how does that work??

Whamo... all the mortgage money in the world was available to anyone who could fog a mirror.

Stated income loans were available to everyone. The real estate market cycle was spinning out of control.

Residential real estate values shot up over night. Everyone had equity and could refinance and pull cash out of their homes.

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Real estate Investors could buy homes and get 100% financing with Stated Income loans. Average people thought they were real estate gurus, and everyone was feeling rich. You know the rest of the story. For more information look at Real Estate Cycles.

When this happens there will be a down turn. Then the real estate market cycle repeats its self all over again.

What this means to you is: Money Lots of It. If you learn to recognize the various phases of the real estate market cycle, and base you’re buying and selling decisions on that knowledge.

You will decrease your chances of making any grave mistakes. Especially buying at the top of the market.

The key to your successful real estate investing is knowing when to invest and when to stay out of the game. The trouble is most people don’t know which phase the market is in and what action to take.

To be successful you must know what phase the market is in and what to do in that phase.

The Four Phases In The Real Estate Cycle:

• Phase #1 - Buyer’s Market (Best time to buy)

• Phase #2 - Buyer’s Market (2nd Best time to buy)

• Phase #1 - Seller’s Market (O.K. to buy with caution)

• Phase #2 - Seller’s Market (Avoid Buying - Time to Sell)

In each market phase, there are strategies that you should be putting to use. Taking the wrong course of action could be disastrous.

There is a glut of houses on the market and demand for homes continues to fall. This is a time when you want to watch the inventory for signs of a bottom. When prices seem to level off this is when to make your move.

Prices may decline a little more, but trying to pick the bottom is just not possible. The trick in phase #1 of the Buyers Market is to identify when the market is about to change.

This is the time to start buying and plan to keep your properties until the next sellers market happens.Phase #2 - Buyer’s Market: The market is heading for a full recovery. Prices stopped falling and started to increase some.

Homes that have set on the market for months are now being sold. Home values will start to increase at a faster pace. Sellers in Phase #2 of a Buyers Market, are usually ignorant of what’s going on.

All they know is they have been trying to sell their property for months. They are happy to have an offer on the table. They may even think you’re crazy for making an offer during this phase of the real estate market cycle.

There gloomy attitude is good for you.

Your line of attack in Phase #2 of a Buyer's Market is to offer the sellers close to their asking price. Provided you have done your market research and related home work.

If the terms are right, there’s no need to quibble as long as you know what the property is worth.

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Phase # 1- Seller’s Market: Home prices are going up and properties are selling at a much faster pace. The demand for homes has started to increase.

This real estate market cycle is still a good time to buy provided you are paying attention to real estate values and the price is right.

Stay away from over priced properties... The beginning of Phase #1 of a Sellers Market still has considerable up-side potential. If you are flipping properties Do Not Get Greedy... Take a reasonable profit and be happy.

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Phase # 2 - Seller’s Market: This is the riskiest real estate market cycle to buy in. Of all real estate market cycle phases this is the one that can wipe you out over night. Homes are not selling very fast.

The market is starting to build inventory. Demand has started to slow. Sellers are still asking for overblown prices, and sales are slowing down...

Sellers who have their properties up for sale begin to realize that the market is changing, but out of stubbornness they keep their prices propped up.

Investors begin to realize the real estate market cycle is changing. Everyone who has been setting on un-sold inventory is getting nervous and begins listing their homes at a lower price.

This real estate market cycle starts an avalanche of over priced listings. Sellers with homes already listed for sale start lowering prices.

Buyers see what’s going on and get nervous. There is very little competition for homes so buyers start making low-ball offers.

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Everyone is waiting for the market to bottom out.

Your plan of action in Phase #2 of a Sellers Market should be to wait until the next Phase #1 of a Buyers Market kicks in.

Usually this happens about the same time the Phase #2 Sellers real estate market cycle ends. If you are going to play the game another round, focus on motivated sellers.

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Take your time. There are not many buyers looking at real estate now so you can take your time and pick and choose.

This same scenario has been playing itself out for the last 150 years and I do not think it will stop any time soon.

Understanding the real estate market cycle can make you rich if you learn how to spot coming market changes.

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