market cycle

Real Estate Market Cycle

As a second generation real estate broker, I have a unique understanding of the market. My father has been selling commercial property and mother selling homes in the Greater Seattle area for over 40 years. They have seen interest rates rise to 18%+ and markets cycle every seven to ten years. I began selling real estate in 2005, in the heat of the last market peak and have seen a full cycle.

We have had a great couple of years in real estate, and as an optimist, I would LOVE nothing more than to see it continue to rise. My combined family real estate experience along wtih keeping my finger on the pulse with others in the industry has outweighed my optimism. A downturn is coming; it is just a matter of when.

Real estate is cyclical. It shifts every seven to ten years. This has been proven true since my parents began selling real estate 40 years ago, and even before that. The new cycle began once the market regained confidence in 2010. Seven to ten years starts once confidence is regained, and ends once confidence is back after the downturn.

We are currently reaching the Euphoria stage, if we have not already reached it. It is possible we are in the Denial stage. What do you think?

If you are looking to realize the equity of your home, don’t wait until the market starts the downward shift. It is impossible to time the peak of the market exactly. I have reached out to my clients to let them know about this as I feel it necessary to give a heads up.

As for interest rates, they are going up, but we have heard this for years now. With the Fed Funds rate at 0, the government is discussing raising it slowly. In time, they will raise it significantly, which is likely going to contribute significantly to the downturn.

What can you do and how can you strategize around the cycle?

  1. Real estate is absolutely an investment but is primarily your home! If you are looking to buy now, just be prepared to hold long term and understand the market will go up and down. Do not be discouraged when the market goes down as you will enjoy your home until the market recovers or longer. Take advantage of interest rates under 4% as this will not last.
  2. If you are investing in real estate. Sell! You will never know when the peak is, and you hold off as long as you see necessary, but once it is too late, you will be holding your home for years to come to get today’s prices. Wait for the market to reach its low point again and buy! If you are truly an investor, you need to detach emotion from your home and realize your profit before it is too late.
  3. If you are building a home, now is a great time! Sell your home at the height of the market, and build. The cost to build is less than purchasing an existing home. Let me know if you would like to discuss this further! 🙂

I am your resource. Call/email me anytime. 425-765-4432, Kenzie@KenzieRealty.com.

 

 

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