It is reasonable for investors to wonder and ask, “Is now a good time to invest in real estate?” This cautious mindset of wanting to know when to invest in real estate can evolve from personal experiences, historical events, being a new investor, or having an entire retirement fund at risk. Unfortunately there is no black and white response to help answer “Is it the right time to invest in real estate?” Although we can take steps to be prepared and make logical investments, to a certain extent, there is no way to know when the right time to invest in real estate is. Only time can tell. For example, I know plenty of people who wish they had bought more properties during and after the 2009 real estate crash. Yet, it was not until after the crash, when looking back, did people realize it was the best time to invest in real estate.
However, there are cues to help investors solve the question of “is it a good time to invest in real estate?” A few of these signals are, when the market is hot, prices are low, and there are fewer investors in the market. For example, when home prices are significantly lower than the value it leaves a larger spread for profit. Furthermore, if there are less investors actively buying, it means less competition and a better standpoint when negotiating a deal. In Christopher Elliott’s article “The Truth About The Best Time To Buy A Home”, Jeff Miller, co-founder of AE Home Group, stated how he thought, “the month of December is the ideal time to purchase a property” (HuffingtonPost). I agree with Jeff and I would even include the month of November because both of these months are when people are busy planning for the upcoming holidays. This idea applies for homeowners, having more options and better buying power, as well as investors, being able to rehab during the slow holidays months and have it market ready come the New Year.
When people ask, “Should I invest in real estate now?” or “Is it wise to invest in real estate now?” I explain to them an important general rule of thumb, which is identifying trends on both a national and local level. Understanding current events will help know someone know when is the right time to invest in real estate. For example, national trends would involve the unemployment rate, level of demand determined by active days on market and number of houses sold, as well as affordability ratios. In terms of local patterns, a person may look at what type of growth is happening in the area. For example, Tampa is a booming city due to the level of development in new outdoor restaurants, like Armature works, and growing sports teams, such as the new proposed stadium for the Rays. Historically, real estate has outperformed or at least kept pace with other investment assets. If you look at a 5, 10, 20-year chart you will see, as a whole, over-time, real estate goes up. Therefore, the best time to invest in real estate is NOW!