Real Estate Cycles
History always repeats itself in the real estate market. Values go up and down over time. There are 4 phases in the real estate market, the Recovery Phase (shifting from a Buyer’s market to a Seller’s market, the Expansion Phase (Seller’s Market), the Hyper Supply Phase (shifting from a Seller’s Market to a Buyer’s Market) and the Recession Phase (a Buyer’s Market). Learn more about these Phases on the reverse side. Numerous factors play into the real estate cycles. Some of the main contributors are:
· Demographics: The makeup of the population, and major shifts in this population makeup, can drive a market significantly. For example, the baby boomer generation’s retirement is expected to cause major shifts in the housing market, as many choose to downsize or move to vacation areas.
· Interest rates: Interest rates greatly influence potential homebuyers’ buying power. When interest rates are high, it could serve as a deterrent for many would-be buyers from buying. Conversely, when interest rates are low, it could encourage a spurt in home buying activity, as the long-term cost of financing a home is cheaper.
· General economy: The overall health of the economy is also a heavy-hitter when it comes to predicting the housing market cycle. Generally, when the economy is doing well or is in an upward trend, consumers feel more encouraged to buy residential real estate. They feel that their personal wealth will improve while placing a bet that their property’s value would continue to increase. Generally, if the general economy is doing well, the real estate market is also doing well. If the economy is sluggish, the real estate market also tends to follow suit.
· Government policies: The government will occasionally intervene with policies to help boost a market that is particularly sluggish or in a prolonged recession. Policymakers have the ability to implement tax deductions, subsidies, tax credits, and different homebuyer programs to incentivize consumers to purchase real estate. These types of governance mechanisms can greatly influence the US housing market cycle.
I have been selling real estate for over 20 years and have experiences all of the real estate cycles. Please reach out to me if you have questions, or are considering selling your home. I would love the opportunity to meet with you and discuss your options.
Debbie Ward-Terry, (863) 660-7927