{"id":104553,"date":"2018-12-16T14:30:21","date_gmt":"2018-12-16T21:30:21","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=104553"},"modified":"2021-03-16T14:51:35","modified_gmt":"2021-03-16T20:51:35","slug":"is-the-real-estate-market-predictable","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/is-the-real-estate-market-predictable","title":{"rendered":"Is the Real Estate Market Actually Predictable?"},"content":{"rendered":"

Whether you\u2019re looking to buy your first rental property or you\u2019re a seasoned real estate investor looking to add yet another property to your growing portfolio, you\u2019ll want to reassure yourself that you\u2019re buying at the right time. It\u2019s a common belief that the real estate market fluctuates in cycles, with prices rising and falling at predictable intervals\u2014but is that really the case? And if so, is it really possible to time the market?<\/p>\n

Annual and Multi-Year Cycles<\/h2>\n

First, let\u2019s draw a distinction between annual cycles and multi-year cycles.<\/p>\n

Annual cycles are somewhat predictable and based around home sales for each season. For example, one study by Redfin found that in Spring, 18.7 percent of homes<\/a> sold above list price\u2014and Spring was responsible for approximately 32.6 percent of all home listings. Compare that to Fall, when 14.7 percent of homes sold above list price, and it only featured 17 percent of all listings. In general, Spring is a better time to sell your home, but it\u2019s not a total blowout, and can still vary by area. In other words, the annual cycle of property prices is fairly reliable\u2014though not entirely make-or-break.<\/p>\n

Then, there are multi-year cycles\u2014an area subject to much more speculation and folk wisdom. Many people believe that home prices consistently rise, peak, and then either fall or stabilize based on somewhat fixed cycles. For example, home prices might rise for five years, then fall for a year, then stabilize, then begin a new growth cycles\u2014a rotation of \u201cboom\u201d and \u201cbust\u201d periods.<\/p>\n

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\nRelated:<\/strong> The 4 Phases of the Real Estate Cycle (& What All Investors Should Know About Them)<\/a><\/em><\/p>\n

These multi-year cycles, if predictable, would almost certainly vary by location. For example, Rose & Jones has stated that the property market in Sydney grows in seven-year cycles<\/a>, with a four-year \u201cboom\u201d period, followed by a few years of stability or decline. However, the market in San Francisco could be completely independent from these cycles due to geographical, political, and other factors.<\/p>\n

That said, housing prices (and economics in general) aren\u2019t the purely rational systems<\/a> we\u2019d like them to be. There are exceptions to every rule, so just because the home prices in a given area have historically grown consistently in five-year periods doesn\u2019t mean a sudden economic downturn or disruption in the neighborhood couldn\u2019t sabotage that growth period.<\/p>\n

Key Variables to Consider<\/h2>\n

There are many events and changes that could influence how the housing market changes, even within a historically consistent cycle:<\/p>\n