The real estate market cycle
Investors would have come across the word “market cycle” and wondered what does it mean and how much it influences your portfolio, assets and other investments. DC Fawcett Real Estate reviews explains about the 4 stages of market cycle in this article.
Accumulating the Assets :
The first step is “accumulating the assets”. The market cycle terminates when the asset value declines. At this juncture, investors are quite unwilling to do some investment pertaining to the dip in the market. The experienced investors consider this as golden opportunity and purchase these properties at low price just like a foreclosed home. When this process repeats, it becomes like a cycle and steadily the market grows and negativity fades.
Having said that, we enter the stage two of the market cycle and the investors call it “Markup”. This phase is usually characterized by frequent fluctuations. At this point, many sideline investors join the market to do some investment. This will probably instill some confidence in the investors’ mind that have stopped involving themselves from stage 1 considering the current market situation is not healthy. This in turn makes the market competitive as retail investors join the race as they find the market to be potential at this point of time. At the end of this phase, we conclude that market has been recovered almost and new targets are set for the investors to accomplish.
The 3rd phase of the market cycle is called “disbursement”. This is the period where all their investments start to liquidate which is done to optimize the profit. The new investors or first-time buyers make use of this opportunity to accumulate their assets which results in volatility owing to fluctuating prices. Experts step away as they know the in and out of real estate market cycle. The fluctuation results in lows and the disbursement cycle get terminated.
The final step is the opposite of step2, “mark down”. The investors realize that they will face both ups and downs in the process and in order to cope up, the start selling their stocks, which leads to downward trend. Investors who hold assets further may face panic selling situation, resulting in decline in prices. A pool of investors joins to buy properties at discounted price and thus the cycle moves onto step 1.
Investors must understand this process as it is quite complicated, it can be either profit or loss. The risk quotient is totally unpredictable in the real estate which is determined by volatility index marked by bear and bull periods.
2017 is characterized by bull market so far, in other words the market is optimistic with 20 percent raise in the stocks. The nation is also witnessing low unemployment rate which is another positive sign of the optimistic market. The bull market ends when bear market commences with the fall in stock market prices.
DC Fawcett virtual real estate investing club consists of blogs where investors can learn more about market cycles and sharpen the investment choices. Apart from market cycles, you can learn more on real estate scams and other marketing strategies.