No matter whether you are a novice investor or a seasoned professional, it can be difficult to know when is the best time to buy real estate. There are many factors that go into this decision, including price movements, supply and demand, and local economic conditions. The guidelines are also different when you are investing in residential versus commercial real estate.
Anosh Ahmed shares his guide to the best times to buy real estate in both the commercial and residential markets.
Factors That Affect Real Estate Prices
Influences that make a difference in the housing market include the size of the population, the income of local residents, interest rates, and the state of the economy. The supply of real estate on the market also has a huge impact on the price.
Effects of the Covid-19 Pandemic on Real Estate Prices
For example, during the Covid-19 pandemic, there was a major exodus from the inner cities to the suburbs. People believed that incidence rates were lower in the suburbs and that they were placing themselves at unnecessary levels of risk by staying in the city. People were also influenced by the state of their jobs, with many white-collar workers being allowed to work from home for the duration of the pandemic.
This changing set of conditions caused a spike in housing prices in many parts of the country. It became a seller’s market, and it was not a good time to buy unless you were interested in inner-city homes and apartments. The supply of these homes rose significantly and prices went down.
Since the economy is improving and contagion rates have gone down, it has become a better time to purchase real estate.
Timing the Market for Residential Real Estate
Home buyers are sometimes told that there is no way to time the market, but people who believe this are simply not paying attention. Housing market trends are affected by various pressures that may rise or fall as the seasons change. Many analysts believe that the best time to buy a house is when sellers are disposed to unload their properties. This most frequently happens in the winter. This is the opposite of the best time to sell a house, which is in the summer.
Buying in the Winter
Competition affects housing prices a great deal. The number of properties available drops in the wintertime because many people take their homes off the market at this time of year. Many buyers are wary of homes that have been on the market for a long time, and taking the listing down during the winter can be a way to combat this problem.
For sellers who are still listing in the wintertime, they are often very motivated to sell. The relative lull in housing market activity around the holidays can be an excellent opportunity for an investor to snap up a quality home at the lowest possible price.
Sellers whose homes have been on the market the longest are the most motivated to sell right away. The costs of owning and maintaining a home don’t stop when they are considering selling, and they want to move on and buy a new home of their own elsewhere.
When homes are at a premium in the summer, bidding wars often ensue. This means that the price of an in-demand property can be driven up artificially, causing the buyer to get a bad bargain if they want that specific home. During the winter, buyers have the luxury of time. Multiple offers are not likely to come in during the negotiation process, making it easier for buyers to get concessions and special offers from sellers eager to exit.
As the end of the calendar year approaches, sellers may be interested in getting their properties sold to maximize their tax benefits. Investors may have advantages if they spend capital before the end of the calendar year.
Investing in the Spring
The second-best time to invest is in the spring. The available supply of homes goes up, and snow will not obscure some of the home features and make it difficult to complete an inspection. The best possible day to purchase a home in the spring is Easter Sunday, if you can find a seller who is willing to do business on this day.
Commercial investments are less seasonal in nature, and they tend to be affected more by economic indicators. A market downturn can be a great time to buy a commercial property, but you have to time it just right to when the economic recovery is beginning to happen. Timing the market is less important with commercial real estate than it is with residential real estate. If you buy when you can afford to do so, you can make almost any circumstance work for you.
Understanding the Basics of Buying Property
Novice investors should learn all they can about the process of buying and selling real estate before they invest their hard-earned capital in a property. Understanding economic indicators that affect home prices both for residential and commercial real estate requires some research. Still, Anosh Ahmed believes that it is possible to take advantage of the right economic conditions.