Have you ever heard someone say that “there was a recession coming” to the real estate market? Have you ever heard an individual utter those exact same words year after year without anything happening? Within propaganda, there is a saying that states that if you repeat something long enough, that it will eventually become the truth.
A similar concept applies for recessions – if you scream recession long enough, you are bound to be correct at least once. With so much in the news and so many gurus out there claim that the end is coming, how do you know who to trust? Are there specific data sources or key indicators that you should be looking for? Should you just keep all of your money tucked under your mattress?
The answer – use data. There are key indicators that one can track to measure the overall health of the real estate market – much like how your body mass index, heart rate, etc. serve as key indicators for tracking your overall health.
While it is nearly impossible to pinpoint exactly when a downturn will occur, it is important to know that a downturn will always occur. Our economy operates in cycles and given that real estate is extremely hyper local, what one state or city or zip code is experiencing may not be indicative of what is occurring in a neighboring state, city, or zip code.
There are four major phases in the real estate market cycle:
Buyer’s Market Phase 1: This occurs when a market is oversupplied with properties
Buyer’s Market Phase 2: This occurs when the market starts to absorb the oversupply, vacant units become occupied, and abandoned properties get purchased in the market
Seller’s Market Phase 1: This occurs when demand for housing reaches its highest point. At this point, investors are eager to acquire assets
Seller’s Market Phase 2: This occurs when job growth begins to slow, properties start to take longer to sell, and the market is slowly getting oversupplied by new developments brought on by real estate developers (market is starting to get saturated)
Armed with that information, it is critical to understand that real estate, like many if not all assets, experiences cycles, but that while one market may be experiencing a downturn, another may be experiencing a positive boom.
Knowing that the real estate cycle a location finds itself in can vary from location to location, it is also critical to understand which key housing indicators can provide additional insights into the overall health of a market.
Conclusion
At the end of the day, only you can determine whether real estate investing is right for you. As a starting point, think through your personal circumstances and the aforementioned considerations. Know that every investment strategy will be different, that each investment strategy has its own pros/cons, and that all investing carries risk so as you continue to gauge whether you should invest in real estate, do your proper due-diligence.
Investing in Real Estate comes with several advantages. Navigating the real estate investing process can be difficult, but you do not have to do it alone. We are here to help.
How You Can Get in On the Action
Cash Flow Champs is a privately held investment company that focuses on acquiring and managing opportunistic and value-add multifamily real estate properties. The company specializes in repositioning well-located assets in emerging markets surrounded by positive demand drivers such as population growth and job growth.
Cash Flow Champs partners with entrepreneurs and busy working professionals interested in investing in real estate but who lack the time to navigate the process. Alongside our partners, we aim to bridge purpose and profits in a manner that allows us to improve the lives of the residents in our communities and the neighborhoods where we operate.
In the words of Robert Kiyosaki, the poor and the middle-class work for money. The rich have money work for them. If you are an individual that wants to build and maintain generational wealth through real estate, all while making a positive impact on the lives of residents and the communities where you invest, we’d love to explore opportunities for synergies.
Schedule a brief call with us so we can get to know you better, understand your life goals, and to determine where synergies may exist.
This information presented on this site is for informational purposes only and does not constitute an offer or solicitation to sell shares or securities in the company or any related or associated company and is not a recommendation to pursue a specific investment opportunity. Any such offer or solicitation will be made only by means of the company’s confidential Offering Memorandum and in accordance with the terms of all applicable securities laws and other laws.