It’s well known that the housing market has a general seasonality to it. Most often, we think about this from a traditional home buyer/seller perspective, but there are also seasonal shifts in the market that investors should keep in mind as they scout for deals. Depending on your exit strategy, these factors are even more important. Check out our top 4 seasonality factors to consider as a real estate investor.
You can find great deals in the slower, winter months…
It’s no surprise that the real estate market cools off in the fall and winter. Weather conditions can make viewing and traveling to properties more difficult. The start of the Holiday season can complicate moving plans with many folks traveling and enjoying time with family. Even considering school calendars, winter breaks are not necessarily enough time for families to uproot themselves in time for the start of school again in January.
All these factors contribute to a slowing down of the market. This means that there is less competition due to lower demand. According to Realtor.com, typically fall and winter months see a 50-60% increase in inventory compared to other seasons. With less competition and a solid inventory, investors have the potential to find and negotiate better deals. Taking advantage of this traditionally slow season could have many benefits for investors.
Hot real estate markets can benefit investors too..
Depending on an investor’s exit strategy though, hot real estate markets can be ideal for investors looking to sell. Spring and Summer housing markets are usually hot, and it’s not just the weather we’re talking about! Yes, nicer weather conditions make traveling to, viewing, and even renovating and preparing houses for sale easier, but there are also other factors to consider. With families taking advantage of summer break from school, many traditional homebuyers are looking to move in the summer months to be settled in a new home before school starts again for the kiddos.
These conditions can benefit an investor who has just completed a fix n’ flip in a family-friendly or up-and-coming neighborhood or an investor who has a rental property near a university looking to switch out tenants. For selling and renting, taking advantage of these spring and summer months can lead to higher sales prices, fewer concessions as the seller, stronger rental terms, and better tenants too as folks are often limited to geography among other factors when finding rental properties.
Then, what’s the sweet spot?
While every investor and strategy is unique, at CPL we have over a decade of experience with the ups and downs of the Indy real estate market. Many of our investors, follow the cycles of the general housing market and find great success! On the other hand, we’ve found that experienced investors can capitalize on both the slow and fast market trends if they are patient, well-timed, and have a good team around them.
For example: searching for a property in the early fall months when supply is high and demand is slowing down, can be a great time to find a good deal others might miss. Once a deal is secured, if you have a solid contracting team, you can get started on outdoor updates before the weather gets too bad. Then, in the cold, dreary months of Winter, while other investors are waiting for the deals of the Spring, you can get work done on the inside of the property. If your timeline stays steady and no unexpected issues come up (and that’s a big IF!) then you should have a completed property ready for the resale/rental hot market of the Spring/ Summer. Finishing up renovations in the colder months allows you to capitalize on this slower time and it secures work for your team throughout the year, a win-win for everyone. This is just a quick example of how a real estate investor can be active in the market throughout the year.
So, you’re telling me there’s a chance….to have year-round opportunities?
All this to say, while there might be ups and downs in the traditional housing market, investors can leverage the good and bad of these cycles to maximize their return. If you are a seasoned investor with a good team around you, there really isn’t a ‘bad’ time to find a deal. Especially, if you have a lender that not only has the experience to support your deal analysis but also the flexibility to make all types of deals work!
At CPL, we pride ourselves on doing just that: creatively thinking to support our borrowers in maximizing their potential. Reach out today to learn more about how you can ride the waves of Indy’s seasonal housing market and come out on top!