In order to make profitable investments, it’s vital for you to understand the cycles of the real estate market because they directly affect the value of properties you may want to consider.
The first thing to understand that just like the weather has four seasons, so does the real estate market have four general cycles – an up market, a peak market, a down market, and a bottom market. In other words, just as temperatures fluctuate during spring, summer, fall and winter so do property prices in the residential real estate market go up and down in their cycles.
However, unlike weather seasons, market cycles tend to last longer – approximately seven to ten years. Keep in mind that these cycles are normal functions of dynamic markets and are affected by factors within those markets.
Now, let’s take a closer look at the four general markets and what goes on in each of them.