Real Estate Trends - Use them to your advantage

It usually takes a big crash in real estate for most of us to realize that real estate goes through cycles. It easy to forget this when your market is climbing through the sky and it seems like it will go on forever. It’s all you hear about then is how great the market is and how everyone expects it will keep going. But when that real estate trend comes to an end and the market shifts we get a rude reminder that what goes up must come down.

Most people wait to jump on the real estate bandwagon until the market is going gangbusters again. The truth is though, you don’t want to be like most people. Even if you learned your lesson about buying at the top from the last shift in the real estate cycle, you don’t want to wait to buy until everyone else is buying. You’ll miss out on all the profit. If you want to use real estate trends to your advantage you have to do what no one else is doing (well, some of us are, just the vast majority isn’t). You want to buy when no one else is buying. That’s a simple way to put it, but you want to do it with the proper real estate timing. If you look at a real estate cycle when do you think the best time to buy is?

We already know it isn’t at the peak of the market, when everyone and their brother Sam becomes real estate investors. We don’t even want to be buying when a market is starting to get hot because we’ve already missed out on a lot of appreciation and it’s a lot harder to find deals then because we are already in a seller’s market. At the same time we don’t really want to be buying when a market is going down. After all, who knows how far prices will drop and how long the market will stay down before it climbs back up.

So where does that leave us? The bottom of the market. This is when no one is buying. Prices are down and the market looks dismal. It’s counter-intuitive, I know. But remember we want to buy when no one else is buying. Why does that work? There are a couple of reasons:

1. No competition - if no one else is buying that means you get to cherry pick your deals. Take only the best ones and leave the others behind

2. Appreciation - the opposite of what goes up must come down is true too. What goes down will go up again! If you buy when the market is down you are set to capture lots and lots of appreciation.

This is how you use real estate trends to your advantage. You essentially act counter to the real estate activity of everyone else. But there is one important caveat. You don’t want to just buy at the bottom of the real estate cycle. I know, I just said to do that but let me clarify. You actually want to buy just past the bottom when the real estate trend is just starting to shift again. The reason for this is that the bottom of the real estate cycle can last a long time. Sometimes years. If you buy at the bottom, who knows how long it will take before you start gaining some appreciation? That doesn’t sound all that appealing does it? If you buy, instead, just as the real estate trend shifts past the bottom, just as the market is poised to go back up then you are properly timing your real estate investment. That’s how you can use real estate trends to your advantage. Want to learn more about real estate cycles? Take a look at this video on real estate market cycles (you’ll need to scroll down to it)