When to Buy and When to Sell – Real Estate Cycles

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We are now in a phase when vacancy rate declines and there’s a growth in new buildings. Soon (after 2-3 years) easy credit will begin to appear. According to the same predictions, around 2027-28, the economic activity will stall, with increasing vacancies and tight credit conditions.

But you should also consider the three types of market caused by the real estate cycles, when timing your sale or purchase. They are based on the law of supply and demand and are hot, cold, and neutral, or:

A Seller’s Market

In a seller’s market, there are more buyers than the available inventory of properties. There are fewer sellers and fewer homes for sale, so the larger demand will cause home prices to go up. So, it’s much smarter to sell than to be a buyer in this type of market. However, most people don’t realize they will pay too much for a home, because all they see and hear is “economic recovery on the way”. But it means you should not buy.

A Buyer’s Market

This is when there are a lot of sellers with plenty of homes available, while the buyers are fewer. This causes prices to fall, but it usually comes with tough economic conditions, when people cannot afford to buy even at lower prices. But if you are financially stable, this is the perfect time to buy, despite the gloomy news.

A Neutral Market

This happens when the supply of homes and the number of buyers are more or less equal. The market is balanced, but sometimes there are good offers if you know how to look for them.

When you determine the current condition of the market, international, but more importantly local, you should know whether or not to buy or sell. You can always buy in a buyer’s market and sell in a seller’s market, but you will need expert advice on that, unless you want to lose tens of thousands.

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