Can You Time the Real Estate Market?

With talk of “price corrections,” “flat markets,” and even “recessions” swirling around the real estate industry, investors are starting to wonder if now is the right time to buy their next investment property.

But savvy investors know that a down real estate market leads to some of the best long-term investment property purchases. You can take advantage of the relatively low prices and interest rates to stretch your investment dollars further than you could at the peak of the market.

So many investors are asking, “Is now the right time to buy? Or should I wait a year or two to see if prices fall further?”

In this post, we’ll explore the idea of timing the market. Is there a “right” time to buy? And can you really time the market at all?    

There Is a Right Time, But It's Hard to Hit

The right time for buy-and-hold investors to buy is at the bottom of the market, when prices are at their lowest. A rock-bottom market is typically accompanied by low mortgage interest rates, further increasing your buying power.

This is no secret. Everyone knows that the bottom of the market is the best time to buy a long-term investment property. But hitting this mark is just as much about luck as about sound planning. You can’t possibly know the market has hit rock bottom until it starts to climb back up. And by then, rock bottom is in the rearview mirror.

If you're fix-and-flipper, the bottom of the market is probably not the best time for you to buy. You want a hot market where values are rising so quickly that the value of your property is automatically increasing during that month or two when your project is being rehabbed. Markets rebounding from rock bottom tend to start increasing slowly before they suddenly take off.

But back to buy-and-hold investors: how can you make sure you’re buying at the right time if you can only see the bottom of the market in hindsight?

Timing Matters Less When You Know How to Find Under-Market Deals

First, just make peace with the fact that you most likely won’t hit the exact bottom of the market. And that’s fine. Buying at any point during the slow market is going to get you a lower price than you would have paid at the peak. So you’re already ahead.

Then focus your efforts on finding properties you can purchase below market value. Because when you can find properties under market, the exact timing is much less important.

Distressed properties (properties burdened by things like pre-foreclosure, involuntary liens, or bankruptcy of the owner) sell under market and make an ideal target for investors. You just need to know how to find them. Tools like PropStream’s Distressed Property Finder allow you to filter your search to focus on these properties. Then you can use PropStream’s Step-by-Step Analysis Wizard to crunch the numbers on your prospective deal before you make an offer.  

With this strategy and these tools, you can find great deals under any market conditions, making any time the right time to buy.