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Should You Time the Real Estate Market?

Posted on July 11, 2022 by Jorge Rubio

Timing anything in the financial markets is generally regarded as a hit and miss proposition. Together with the deflating real estate market, however, opportunities abound.

Should You Time the Real Estate Market?

Throw out the idea of attempting to time a market and many media gurus will tut-tut the mere idea. The basic criticism is three fold. First, you are not smart enough to do it. Second, you may wait to long and miss the best buying opportunity. Third, timing is irrelevant as certain investments such as real estate increase steadily over time that means you should just buy right now and wait it out.

In the case of real estate, these assumptions are not as influential in the decision to time certain markets as they may seem. Right now, the real estate market in many areas is deflating after a historical period of appreciation and demand. To put it simply, this represents a buying opportunity for the savvy buyer. So, should you try to wait and find the base of the current market? In my view, you should think about it.

Are you smart enough to do this? Yes. Most financial markets can be a little complex once you get down to the nitty gritty of this situation. The stock market is influenced by a huge variety of factors that would appear to make it nearly impossible to time price movements if you don't have insider information. That having been said, tens of thousands of day traders appear to be able to make solid profits doing this. If they can do it with shares, you can certainly do it with real estate.

Are you going to miss the base of the market? Maybe, but I doubt it. The beauty of time the real estate market is, indeed, time. Unlike stocks, real estate prices tend to move over slower amounts of time. In a fast moving real estate market, you still will have a few weeks to evaluate the price moves. To put it simply, they don't move over minutes or hours but in easily identifiable trends. Even in case you overlook the absolute bottom as prices rebound, you still need to get a really good deal compared to prices two years ago.

Should you buy today since real estate is a great investment over time? You could. This cliché is grounded in fact. Over long intervals, real estate has proven a consistent trend of appreciation. That having been said, historical appreciation rates run from six to eight per cent depending on the community. If you can find a house at a 30 reduction to two years ago, you may reap the benefits when prices bounce back.

If you time the real estate market when considering purchasing? The choice is yours, but do not be put off by supposed professionals telling you it shouldn't be done.