July 01, 2019 at 9:04am | Phil Aitken
Both rookies and seasoned real estate investors believe the real estate market to be cyclical in both pricing and predictability and that the market can be "timed." Experts say there are two cycles, annual and multi-year, which drive the market. Annual cycles are based on seasonal home sales and seem to be somewhat predictable.

Multi-year cycles are based on the conviction that home prices rise, peak and stabilize based on fixed cycles. Such cycles are location-based and housing prices are not always rational. For example, home prices might have a history of consistent growth over the past few year in a given city, however the future remains unknown and we are always susceptible to economic surprises and demographic changes.

There are several variables which effect change within the market regardless of past cycles of successes. Major changes to our economy certainly have an impact as such changes are reflected in higher interest rates and decreases in the demand for housing. If the overall income of a particular local increases due to the placement of a new company, for example, home prices are bound to rise alongside of demand as cash begins to flow more freely. The construction of new parks or the addition of a new neighborhood school have the power to increase property values significantly. Changes pertaining to demography are particularly fascinating when neighborhoods are overtaken by real estate investors and homes are turned into rentals rather than sales, sometimes resulting in decreased property values.
Related: "Boomers Continue to Bloom Where Planted"
                     "Age Demographics & Market Value"

Historical property values are a great resource for those wishing to educate themselves regarding market cycles. While patterns will likely be detected, they should never be the primary basis for selling your home or buying a new house. Market patterns do not pertain to specific properties and you should always do your homework before making any major decisions. At the end of the day, the market does ebb and flow and the cycles are somewhat predictable, however they are fallible and do not apply in all situations.

For more information, contact The Aitken Home Team today!



You message has been sent!

Send us a Message

View our Privacy Policy