Being able to effectively read the real estate market can save you from making some pretty egregious choices when it comes to making a purchase. Keeping an eye on the trends, interest rates, and knowing when to invest and when not to invest are important factors in a successful run in the real estate industry. Here’s how to read the market for greater success.
Pay Attention to Trends
Trends come and go in pretty much every market, and it’s important to keep track of these passing patterns in order to effectively read the market. If you notice specific patterns in market value and behavior every few months or few years, you’ll be able to better plan your buying and selling schedule around these patterns (depending on if they’re good or bad patterns).
Learning to predict trends won’t help you make 100% accurate predictions, of course, but it can help you to make more informed decisions. Trends show how the market behaves under specific conditions, which is important to know when you’re making any type of buying or selling decision. If you’re in a recession, the trend may be that housing value plummets, making it a good time to buy up cheap properties.
Following experts on social media like Joseph Pingaro can clue you into specific market changes as they occur. Not to mention, following the advice of an expert can save you the trouble of learning first hand from mistakes!
Interest rates change in response to market health and lenders’ specific requirements. Your interest rate will depend on your credit history and several other factors, but it’s certainly beneficial to pay attention to the overall interest rates the market is offering. The higher the interest rates are, the higher the overall cost of a mortgage or commercial property loan will be; so you’ll want to keep a close eye on rates so as not to overspend.
Interest rates not only affect individual purchases but also the market as a whole. Don’t fall behind on the current rates, especially if you’re looking to buy a home or property in the near future!
Knowing how many homes or properties have been sold in the last month or so, or the transactional volume of the market, can help you decide whether or not it’s a good time to buy or sell property. If the transactional volume was incredibly low, it means no one is buying, and it probably isn’t a very good idea to try offloading any properties.
Alternatively, if the volume is high, it’s probably a good time to sell, since there are so many people making purchases in the market. This specific market trend is very important when you’re trying to get a better read on the overall health and stability of the real estate market.
When to Invest
Generally, the best time to invest in real estate is when the market is in a downturn. Why? Because you can get access to relatively cheap properties that will only gain equity as time goes by. Once the market goes back to normal, you can offload those properties for a hefty property and generate plenty of equity along the way.
Housing prices tend to drop when the market plummets, so you should be able to pick up at least one well-priced property to either rent out or sell once the market improves. Imagine how much you could accomplish with two or three properties with thousands of dollars in equity!
While the market is constantly changing, buying properties in winter is generally the best practice, since sellers are under more pressure to offload their properties. This means better negotiations, and, if all goes well, you’ll get access to a much better price than you would have gotten in the middle of summer.
When Not to Buy
Generally, you don’t want to try to purchase property when the market is doing really well and prices are at their highest. The goal of buying, say, a home is to accumulate as much equity in the property as you possibly can. If you can find a house for a cheaper rate during a market downturn and pay off the mortgage earlier, your home will acquire much more equity over its lifetime than if you’d paid the heftier price in a healthier market.
You also shouldn’t buy if you’re paying in cash. Paying for your home outright may leave you without a monthly mortgage, but that’s not necessarily a good thing. Your mortgage payment is a part of what drives the equitable growth of your home, and without one, it will be more difficult to increase the equity of your home overall.
Reading the markets isn’t impossible, but it can be challenging if you don’t know what to look for. Pay attention to trends, interest rates, and expert advice to get access to the best information possible. Remember that knowledge is truly the best tool you have at your disposal when you’re operating in real estate.