Real estate is a vast industry closely linked with the general economy. If the market performs well, then the economy grows as well. If you are a real estate investor or developer, it is essential to have a known real estate cycle. It helps you predicting upcoming trends and making informed decisions about investments, developments, and regulations. If you want to keep knowledge about all the phases of the real estate cycle, then continue this blog reading.
The real estate cycle has four phases with different significants.
3. Hyper Supply
Now, we discuss all phases in some detail.
The recovery phase is the initial stage of the real estate cycle and is associated with recession. The market is believed to be at its lowest point during this phase. If you want to get more profit, purchase properties at lower prices and hold on to them to perform repairs or remodels to rent or sell. According to Yousif Abudra of Forbes Magazine,
“This phase is also a prime time for investors looking to find core properties that are ideal for investors using the core asset investment style.”
After recovery phase, we move to the second step of the cycle that called expansion. In this phase, the market begins to expand. Rental and purchase prices start to rise. This phase is also characterized by having declining vacancies with a growing demand for rentals. It can present an ideal buying period because investment risk is regarded at the lowest.
The Hyper Supply Phase:
When the supply of real estate in the market exceeds demands, then hyper supply phase starts. In the expansion phase, new development and redevelopment increased and caused oversupply in the market, and real estate prices began to decline due to the lack of sufficient demand. The hyper-supply phase exists when the economy shifts and presents a more excellent supply than demand for rental properties. This phase expands when the economy enters into the recession phase eventually.
When rent growth is negative and high vacancy rates, then the recession phase begins. Most investors will invest at this time because of pricing are below. They then wait until the real estate cycle circles back and the downturn is over—as the market begins to recover and eventually expand. Therefore, they can sales the property at the recovery and expansion phase.
Ukaaj insights real estate investors must know if an investor strives for long-term success following real estate cycle is a must. The real estate market is to shift significantly, so investors must stay on top of their toes if they hope to find opportunities in each. Nothing more can help all investors to hold the patience & grow steadily with effectiveness that lasts long.