Is 2019 Truly Going to be a Buyer's Market?

The forecast for the 2019 real estate market is in, and it’s a bit of a good news / bad news situation. Everyone seems to agree that real estate in 2019 will slow down, which is never what property investors like to hear, but the experts also seem to agree that this slow down will lead to a healthy market adjustment.

For years now, home prices have been on the rise due to a growing economy, low housing inventory, and low federal interest rates, among other factors. Now, we’ve gotten to the point where home prices have risen so much that many potential buyers are priced out of the market. New construction is starting to take hold, but the housing inventory will still need a while to catch up to home prices. Income levels will also need time to catch up. In other words, the slow down is a needed breather that will allow the housing market to stabilize without crashing, which is the big catastrophe that everyone feared a year ago but now seems quite unlikely.

In terms of “buyer’s market” versus “seller’s market,” there’s no doubt that we have been in a seller’s market for quite a while. But now that home sales are dipping and houses are staying on the market longer, a transition seems to be taking place.

At the same time, though, it’s difficult to call the current market a “buyer’s market.” While sellers no longer have the extreme upper-hand, home prices are still going up and inventory is still low enough that buyer’s options are substantially limited.

Of course, whether a buyer’s market, a seller’s market, or neither, experienced house flippers need not worry. A seller’s market means a higher sale price, but also a higher initial purchase price. A buyer’s market means a better deal up front, but more risk of a disappointing sale price down the road. The most experienced house flippers can thrive in either market. While a buyer’s market may present more challenges, those challenges are far from insurmountable for knowledgeable flippers.

Some of the most important tools for property investors in a buyer’s market include:

• A strong network. A close-knit group of confidantes and informants including realtors, other property investors, and wholesalers can be an invaluable resource, especially when the number of available rehab properties is low.
• Savvy marketing. From commercials to direct mailers to a user-friendly website, the right marketing strategy can pay major dividends for serious investors. That said, the upfront costs of marketing aren’t trivial, so it always makes sense to do your homework and possibly work with a marketing specialist to ensure that your plan pays off.
• Patience. When the number of opportunities is diminished, less experienced house flippers will settle for properties that don’t quite fit their specifications. This can lead to a lot of wasted work for little or no profit. Sitting tight and keeping an ear to the ground usually pays off.
• Innovation. While breaking your own rules can lead to disappointing returns, carefully considering new and previously unexplored opportunities can have great benefits. Don’t be afraid to research the benefits and drawbacks of different types of property investments, arrangements, partnerships, and more.

However you find a way to stand out in 2019, keep in mind that 2020 is expected to be the biggest home-buying year for Millennials to date. There’s always a silver lining…