Peak season for real estate is coming. What does it mean for investors?
What can investors expect of the market over the coming months? Is it time to buy, sell and invest?
The New Roaring 20s
After the Spanish flu pandemic swept America in 1918, the west entered the Roaring 20s. A period of great prosperity and economic activity.
The new 2020s appear that they could follow this pattern as well. There is immense pent-up spending. Especially in travel and some consumer sectors. As lockdown easing spreads, it is possible that we’ll experience a new period of great growth.
That already started in real estate in 2020. It has been a year of roaring activity and rising values. There have been some exceptions in redundant sectors, though this is more about accelerating existing trends than changing directions. Overall, the US housing market has been experiencing record sales and price increase activity. In some areas this is up well over 20% in the past 12 months.
Peak Real Estate Season
The annual peak real estate season comes between late spring and back to school season in the fall each year. This is when there is typically the most activity, and most bullish activity.
This year it may show up early with tax refund season, stimulus checks, and some kids still not back in school. It means more listing inventory, but also more buyers and renters. More sales activity will further support rising prices.
The only downside is that it may in turn lead to higher interest rates on bullish data in the industry and its impact on the wider economy.
With continued substantial growth quite likely over the next several quarters, investors may be wise to apply the straw hat strategy. They say to buy straw hats in the winter. Meaning buy them while they are still on sale, before retailers mark them up with rising demand in the summer.
While individual investors should also be using dollar cost averaging and be disciplined in investing each month and quarter, even better deals may be found earlier this year.
A flurry of moving activity over the next six months should be incredibly encouraging for landlords. New tenants put more cash on the balance sheets, and will typically kick start new periods of stronger payment and income performance.
Increased exit opportunities are also likely as we move through to fall. Mature and peaking assets may be liquidated as pricing keeps rising, and buyers become more motivated.