Trying to nail down which way the real estate business is going is like trying to hit a moving target. The business changes so much that it is impossible to get a grasp on what is up and what is down. One week home values are soaring with no end in sight and the next week the market has cooled off dramatically. The best way to build a sustainable business is by staying clear of what is hot at the moment and focusing on what works for the long term. Trends will come and go as they always have, but investors are advised to entertain sustainable real estate practices. Don’t allow your business to be susceptible to fluctuations.
It was only a few years ago that short sales and foreclosures were in vogue and everyone wanted to get a piece of them. Much has changed in a year or two and short sales are down over 30% in that time. If you had dedicated a large chunk of your budget and time to get these specific deals, you may be regretting that move. There is nothing wrong with trying to capitalize on what is hot right now, but you shouldn’t make this any more than a temporary shift and be prepared to get right back into to what you do best as soon as the trend is over.
The use of trends does not fall exclusively on how you market and buy property. If you rehab or build, you are aware of how quickly housing trends effect the market. One day there are trendy items in the kitchen that buyers want and the next bathroom items and fixtures are the craze. These may work if you are building for a specific buyer, but what happens if your property doesn’t sell right away? Will these items stand the test of time and be desirable in a year or two? If the answer is no, you need to evaluate if the trendy items are really in your best interest for the long term.
If you think back to some of the most popular trends, they have a way of going to extremes. You will have a certain segment that loves them and another group that doesn’t want to go anywhere near them. If you alienate this group, you eliminate them from your buying or renting pool. In time, you will either have to pay to get these items updated or take less when you decide to sell or rent. If you opt for neutral items and less trendy colors, you can let your house do the talking instead of relying on gimmicks and trends to sell.
The problem with trends is that they cool off just as quickly as they get hot. Once the trend cools off, it will take another turn of the cycle to get back to relevance again. You don’t want your business to be susceptible to fluctuations. Stick to what the masses want and stay clear of trends.