Timing the Real Estate Market

For today’s lesson: Visualizing the real estate market and other impossibilities.

Warning: My proofreader called this article “highbrow” but what she meant was BORING.

When I think of the real estate market, I think of two visual representations:

1. A teeter-totter
2. A parabola

I’ll explain why in a second, but first,

There Are Three Types of Real Estate Markets: Buyer’s, Seller’s and Balanced (see below for definitions). 

Factors that affect supply and demand of homes for sale include employment, interest rates, the cost of raw building materials, the number of new homes being built, and other local, national, and global factors.

The market as a teeter-totter: Like this playground favourite (maybe?), it is almost impossible for forces not to act to force one side up or down. I mean, how often to drive by the park to see both sides suspended in the air in perfect balance?

Well, the forces of the economy and society act on the market to force tip the market one way or another. A balanced market is fleeting and you almost won’t know you are in it as you pass through.

And that parabola from grade 11 math class? 

So, as you can see from my artistry above, in which the blue line represents how home prices might trend over time, the vertex of the parabola represents the point at which prices are highest – the top of the market. The thing is, in real estate you don’t know you were at that vertex until you pass it. So it’s literally impossible to precisely time the market. 

You may consider this a rambling email, but my point really is – you won’t know it was a balanced market and you won’t know you were at the top or the bottom of the market until it’s too late…

So why not just find yourself a comfortable home that meets your needs and that fits within your monthly budget? Let’s stop making it so complicated. If you stay there for more than a minute (okay, 3-5 years), and you make mortgage payments that chip away at your loan principal (not interest only), history tells us it will be more than worth it!

For more common sense ramblings, send me a text, book a call or simply reply to this email. I’d love to help you or your loved ones.

Definitions

Buyer’s Market: There are more homes on the market than there are buyers; it will take 5+ months to buy up all the homes for sale today if no new homes become available.

Balanced Market: Home supply and demand are approximately equal, and it would take between 4 – 7 months for all the homes to be bought up.

Seller’s Market: More people want to sell than want to buy; we all know this one from the pandemic experience.