Real Estate 101: Timing the Market

Whether purchasing real estate for investment purposes or for personal use, it is a good idea to keep a close eye on the real estate market. After all, by accurately reading the ebbs and the flows of the market, you can potentially save thousands of dollars on your purchase. Of course, the trick to making this happen involves knowing how to time the market in order to purchase the property at the best price possible while still getting the property of your dreams.

What Does Timing the Market Mean?

Put simply, timing the market involves choosing the best time to make a real estate purchase in order to save the most money. When in a recession, such as the one the United States is currently climbing its way out from, purchasing property right away will prevent you from saving as much as you possibly can. If you wait too long, on the other hand, real estate prices will start going up and you will have missed out on the opportunity to the largest amount possible. Therefore, timing the market involves watching market trends in order to purchase the property as close to the bottom price as possible.

Following the U Curve

In order to better understand the concept of timing the market, it can be helpful to think of the market and its recovery as the letter “U.” The top left side of the U would represent when the economy is in full-swing, which is when real estate prices are at their highest. As the effects of the recession start to hit the real estate market, prices start to slide down the left arm of the market. Ideally, you will want to make your real estate purchase once the prices hit the bottom of the U. Of course, it isn’t possible to perfectly time the market at its lowest point. Rather, your goal should simply be to make your purchase as close to this bottom point as possible.

The bottom line is simple – if you missed making your purchase while the market was experiencing downward momentum, it’s not too late to purchase real estate at significantly reduced prices. Most markets throughout the country have already bottomed out and are starting to climb back up the right side of the U. Combine the low prices with government tax breaks, and there truly has never been a better time to make a property purchase.

About the Author:
Eric Bramlett is the co-owner & broker of One Source Realty in Austin, TX. Eric specializes in Lake Travis real estate, Austin condos, and Steiner Ranch real estate.