The Real Estate Market Cycle-Introduction
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I am going to take a departure from discussions about investment property and landlord issues into a more brainy discussion about Real Estate Market Cycles and It’s Implication for Market Timing. This post is adapted from a concept called, “The Garrison Cycle”, which was created by Marc Garrison who started the National Association of Real Estate Investors, NAREI, in 1985.
After studying ten real estate markets, for a year, from around the country with different job growth and job losses, Garrison found that every market can be classified into one of four market phases:
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This simple, but powerful concept allows us to explain not only the bust market of the 1980s, but the current market that we are experiencing today. The other paradigm shift that Garrison’s research explained is that even though national (and international) forces affect the economy as a whole, every market around the country is actually on a different point of the above perpetual circular economic cycle.
Understanding the cycles and what to watch for (or what we have seen in the past) can change the way that you invest in real estate. This tool will identify the best time to buy in a market and when to sell before the market begins to decline.
Starting next week, I will examine each of the 4 phases in depth and give you my predictions of where we are in the market and what you should be doing right now.
Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment real estate. He owns and manages almost 30 investment property units from single to multi-family. Find his blog at www.minnesotainvestmentrealestate.com. His website can be found at www.mnirea.com
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