Real estate cycles are inevitable. No matter what happens, there are always economists around on both sides of the bubble question. Every hot market is described by some of them as being fundamentally different, and therefore not likely to go down.
Market always go up and down. Economic cycles always occur. There are several factors to consider when you are a buyer or a seller in a market that is changing rapidly:
1--Where in the cycle are we? Are there reasons to believe that there is more growth to come?
2--How does the local market compare? Have we been ahead of the national curve, or lagged behind?
3--What are interest rates doing, and how is that likely to change over the next couple of years?
4--Will the transactions being considered balance out? If there is both a buy and a sell contemplated, are they in equivalent markets, so that the "buy low, sell low" or "sell high, buy high" rules apply?
5--Are there reasons to believe that this part of this economic cycle might truly have any unique factors?
6--Do other life or work considerations come into play? (Hint: Other considerations always come into play!)
When considering our particular Connecticut market, it is important to note that we have lagged behind the rest of the country in price appreciation, and this has gone on for a couple of decades, at least. That would suggest that there is more room for growth in this area than in some others.
Interest rates are not likely to be this low for a very long time, even though they have already begun to rise. Even in a "sell high, buy high" market, and even if only the "buy high" applies, interest rates will make a huge difference over the life of a mortgage.
There really are some unique factors in this economy at this time. People have extra cash, in many cases, because they may have gotten stimulus checks, they haven't traveled, they haven't been able to dine out, and they haven't bought anything but garden tools, athleisure clothes, and liquor for a year. So the pent-up demand isn't just for housing--it's for everything. Spending more on a house can be a better plan than eating out every night, and with a longer-lasting benefit. Working at home may not go away for many people, so extra space is important. Our region is well-positioned to see an influx of residents from big urban areas. Some of our drawbacks in transportation and infrastructure are being addressed nationally, with funds for improvement. These points can possibly tip the scales on the question of this market really being different from other hot markets.
So, we are down to the last question--are there other considerations? Whether buying or selling, it's time to weigh the options, and act quickly.
