In, nearly – every financial area, it seems, some people seek to attempt to proceed, with a greater advantage, hoping to time, the specific component, in order to, hopefully, buy – low, and, sell – high! We often witness this behavior, regarding real estate buying and selling, especially, residential transactions! When prices seem to be trending, up, especially, in recent days, when we have seen a record – pace, of price increases, more individuals seem to be getting involved, in what is referred to as, flipping a property, which means, buying a particular house, at a perceived, opportunistic price, and making some, predominantly, cosmetic changes, and selling it, soon, at a profit! After, over 15 years, as a Real Estate Licensed Salesperson, in the State of New York, I have witnessed, this process, being successful, as well as, considerably – less, so! With, that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 4 reasons, most people shouldn’t try to market – time, real estate.
1. You can’t predict the future, consistently, and/ or, accurately!: If, we had a Crystal Ball, perhaps, we would become, more capable of accurately, and consistently, predicting the future, including, relating to house prices! Since, historically, these prices have tended to be cyclical, it is challenging, to know, when this might, make sense! Obviously, every financial strategy/ action, should be considered, on a risk/ reward basis, and only those, who are ready, willing, and able to handle the uncertainties, stresses, and potential losses, should attempt to flip – a – house!
2. Several (not just – one) factors impact real estate, including pricing: No one factor determines, how prices, will move! Some of the factors, include: interest rates (including mortgage rates and terms, etc); Supply and Demand; seller and buyer perceptions; confidence! We have experienced, a prolonged period, of record – low, interest rates, and corresponding, mortgage terms! When this occurs, more people qualify for a mortgage, thus, increasing, demand. Perhaps, the biggest factor, is Supply and Demand, and, when the supply is lower than the demand, prices go up! One factor is based on emotions, and thus, the perceptions of both, buyers and sellers! Overall consumer confidence influences many people’s mindsets, and, that impacts the overall market!
3. Different factors do not always work, in sync!: When mortgages are easy and cheaper, to get, prices usually go up! When confidence is high, and inventory, low, it, generally, causes an upward trend! However, those factors, which tend to increase, and/ or, decrease house prices, often, may not align, and so, the overall trends, becomes more challenging, to predict!
4. Relationship between home sellers, and qualified, potential home buyers: In general, when demand is great, there are more, qualified, potential buyers, than, houses – for – sale (inventory)! The opposite set, of conditions, usually creates a so – called, Buyers Market. At times, we witness a neutral set of conditions!
For most, trying to market – time, real estate, is speculative, and risky! Like, any, other financial asset, proceed with an open – mind, and, in a well – considered manner!