Fall real estate market trends have started to take shape, and now is as good of a time as any to start deciphering them. What’s more, those investors that can get ahead of the correct fall real estate market trends will find themselves in a better position than ever before.
It’s true what they say: the housing market really is cyclical. History has taught us that there are typically four cycles the real estate industry adheres to: Recovery, expansion, hyper supply and recession. While there are certainly exceptions, it’s this four stage cycle that we have grown accustomed to.
It’s worth noting, however, that not all cycles are created equal. It’s entirely possible for smaller cycles to take place within each cycle. Whereas the order of operations I discussed above could take as long as a decade to complete, there are annual cycles that warrant your consideration as well. Namely, annual cycles can be broken down into the four seasons: Summer, winter, spring and fall.
With the page about to turn to fall, it’s time we took a closer look at the summer real estate trends and which ones we expect to continue into the fall. If for nothing else, it’s those investors that can anticipate which fall real estate market trends to expect that will stand the best chance of realizing success in the coming months. It stands to reason that if you have an idea of which way the market is heading that you will have a distinct advantage over those who are otherwise oblivious to this year’s fall real estate market trends. So do yourself a favor and listen to what the market is saying; it just might be the best thing you do in the latter part of the year.
Those with an idea of what will transpire in the remaining months of 2017 will notice how easily the scales tip in their favor, which begs the question: Which fall real estate market trends can investors expect to carry over from the summer?
FALL REAL ESTATE MARKET TRENDS YOU CAN’T IGNORE
Buying a home in fall
The summer real estate market saw inventory levels fail to get back to adequate levels, or at least those that could keep up with demand. As a result, it’s safe to assume we won’t see inventory where we want it as early as this fall.
Inventory levels, or lack thereof, have persisted to be the real estate market’s bane of existence for the better part of the current recovery. While nearly every fundamental indicator is better off than it was a few short years ago, it’s the amount of available inventory that continues to hold back the U.S. housing market from realizing its true potential. That said, it doesn’t look as if we will see the inventory burden ease before the end of this year. New construction is in the works, but it shouldn’t be ready in time for the fall real estate market.
For now, available inventory sits somewhere in the neighborhood of 4.2 months, according to the National Association of Realtors (NAR). As recently as August, national housing inventory would be depleted in as little as 4.2 months if homes continue to be sold at their current pace. What’s more, August’s numbers represent a 0.3 month decline from the same time last year. To put things into perspective, a healthy, balanced market will typically boast six months of available inventory, so we are currently missing about 1.8 months of inventory. There is no doubt about it: inventory hasn’t gotten any better, nor should we expect it to in a matter of months. But what does that mean for investors?
For starters, those that have already acquired their next project (or are currently working on one) could see the competition over their impending sale increase dramatically. If for nothing else, a lack of options should place prospective buyers in a position to pay more if they hope to land a house, which is great news for sellers. In fact, it’s entirely possible for this year’s fall real estate market trends to induce more bidding wars than we have seen in recent history; great news for those that already have a deal under their belt.
It’s worth noting, however, that there are plenty of investors that will look to buy a home in today’s competitive market as well. And while a lack of inventory will do its best to prevent them from acquiring a house, it’s far from impossible. That said, buying a home amidst expected fall real estate market trends will require a new perspective. For starters, investors looking to buy will have to adjust their criteria. Now is not the time to be picky. Don’t let emotions get in the way of a deal, and let the numbers do the talking. In the event you are presented with a deal in which the numbers will net you a worthwhile profit, you could have a potential candidate. Just know one thing: the same competition that helps sellers will hurt your chances of landing a good deal, but I digress. Increased completion is far from an insurmountable obstacle; it’s simply a minor inconvenience for those that are prepared.
I maintain that real estate investing can be incredibly lucrative in any market, even with the fall real estate market trends I expect. While there will be more be competition over fewer house, savvy investors will know how to navigate the waters. More importantly, they will know what to do when the moment comes.
If you are heading into the fall real estate market hoping to acquire a home, but are otherwise skeptical of whether or not you will be able to get one at a price you like, don’t worry, there are plenty of strategies you can implement. For starters, recognize that cash is king. Cash payments will almost always be favored by sellers, as they are less likely to fall through and suggest the buyer is serious on following through with their offer — two things that are invaluable to sellers. More often than not, cash offers will beat out loans that need to go through a third-party banks or lending institutions.
In addition to cash, I recommend uncovering the seller’s true motivation; for it’s only when you can identify what the seller really wants that you are able to give them it. You would be surprised to find out how many sellers covet things other than money. For instance, a seller could have placed their home on the market because they needed to move yesterday and time is of the essence. If you were able to uncover such a motivation, you would understand how important a timely sale is for the owner in question. What’s more, if you can give them the timeline they desire, you stand a better chance at landing the deal, even with competition as tight as it may be.
Don’t let the lack of today’s inventory scare you away from participating in the fall real estate market. Instead, adjust your strategy to keep up with fall real estate market trends. It’s the only way, at least that I am aware of, to keep the odds in your favor.
As I already alluded to, a distinct lack of inventory could potentially increase prices. What’s more, fall real estate market trends suggest demand will not take a hit as a result. In fact, we could see demand increase as the year draws closer to an end. Not only is the economy better off than it has been in years past and a larger portion of the Millennial generation prepared to make their first purchase, but changes to some of today’s most prominent economic policies could drive demand up even further.
Most notably, propositions have hinted at dismantling the Dodd Frank Act, which could make receiving loan approval much easier for many would-be homebuyers. An additional proposal also hinted at the idea of doubling the standard tax deduction for owning a home. Proposed policies such as these could simultaneously drive up demand and home values, especially with inventory remaining low. But again, what do higher prices mean for today’s investors?
Of particular importance, however, is the emphasis I would place on decisiveness. Industry pundits and real estate professionals are of the belief that prices will rise in conjunction with fall real estate market trends. That said, now is not the time to wait for a deal to come along. With prices expected to rise, there’s a good chance the deal you are currently looking at will cost more in one month’s time. Instead of trying to time the market for a better deal, I recommend moving on the deals with prices you are already comfortable with. The longer you wait, the more you are likely to pay.
One more thing: the fall real estate market tends to represent a transition from summer to winter. In other words, just as the weather will cool down, so too will activity in the housing market. It’s safe to assume fall real estate market trends will dictate a slower pace, but that doesn’t mean you need to exercise the same tempered expectations. In fact, I recommend ramping up activity to get ahead of your competition. While everyone is taking time off for the holidays, the fall may present an opportunity to get ahead. Increase marketing efforts, establish more relationships, maintain those you already have and do anything you can to usher in 2018 on a high note.
Fall real estate market trends will most likely echo their summer counterparts with slightly tempered expectations. That said, those investors that can predict what to expect this fall should find themselves with a significant advantage as the year comes to an end. If you want to stay ahead of the curve, listen to what the market is currently telling us, and you could be in for a great finish to the year.
Fall real estate market trends will most likely echo their summer counterparts with slightly tempered expectations.
Those investors with a keen idea of what to expect from the real estate market this fall will have a significant advantage over those that don’t.
In accurately predicting the trends that will carry over from summer, investors could find themselves one step ahead of the competition.