Given all the turmoil in the world, how can we decide the point of the real estate cycle we are at? So many international variables playing such a complex role, how can we accurately analyze the real estate market with just the economic indicators? When is the best time to buy or sell my property?
Now, we are aware the real estate market works in cycles, and the tactics one employs when investing depends on the stage of the cycle. The outcome depends on it.
The stage decides the tactic
The key to investing strategically is the real estate cycle. The heavier you investment in real estate the more crucial it becomes to have a sharp insight into the past and present trends of the real estate cycle. This is the prerequisite to understanding why real estate market reacts the way it does under various conditions. It is important to use this cycle to control your over all tactic and select investments that are likely to give the best results during specific phases.
While patters begin to form and the cycles become foreseeable, there is never a 100% guarantee. Analysts can improve their forecasts by studying key indicators of the cycle. A single key driver will provide insight on a particular trend, while in combination with others leading to a reliable forecast.
It is proven that the real estate cycle exists in all free market economies with a deregulated financial system. However, the cycle is quite different if the country’s economy is underdeveloped and its financial system is strictly regulated. Under such conditions, market instability can interfere with growth of a normal real estate cycle, whose pattern moves from a boom to a slump to a recovery and boom again, the cycle continues.
Canada refused to loosen regulations. As a result, Canada has maintained relatively stable real estate values alongside a healthy banking system.
Three Phases of the Real Estate Cycle
Before we get into type of key drivers, we must look at the real estate cycle itself, to clear all the confusion. For now, let’s stop looking for opportunities without first having understood the real estate life cycle. The historical data cries out for a more advanced interpretation. It’s time tested that more advanced the understanding of the cycle shows that it consists of 3 major phases boob, slump & recovery.
The cycle is always there where ever you go, be it US, the UK, Australia, South Africa or Europe and even some parts of Asia.
Estate investment involves many variables, so risk minimizing is of the utmost priority. Stay informed and updated on all the latest market trends, staying pro active along with proper due diligence and you will be able to handle your money. Go out and start scouting in a region most familiar to you. It will give you the much needed to confidence required to make the decision. Good luck and happy investing!