Learn How To Start Investing In Real Estate
Learn How To Start Investing In Real Estate

2 Fall Real Estate Market Predictions & What They Mean For Investors

Written by Than Merrill

Key Takeaways

  • Those investors keen on the offerings of the upcoming fall real estate market will find themselves with a significant advantage.
  • While predicting the future of the housing market may be a fool’s errand, there is nothing wrong at taking educated guesses as to the direction things are heading.
  • If you can accurately identify the trends that will continue into the latter part of the year, it stands to reason that you will have a significant edge over the competition.

Summer is slowly coming to an end and the fall real estate market is inching closer and closer with every single day. Just as sure as we can expect the seasons to change, the housing market will likely follow suit. As the weather begins to cool down, it’s safe to assume the housing market will do the same. It’s worth noting, however, that the change isn’t necessarily a bad thing, at least not for those who are prepared for what is to come.

While housing market expectations may be tempered until spring, there is absolutely no reason investors can’t capitalize on it over the next quarter. In fact, those that can identify the trends expected to last into and for the duration of the fall real estate market could tip the scales in their favor. If for nothing else, knowing what to expect out of the coming months could give you a significant advantage over the competition.

I maintain that the housing market can say a lot to those that are willing to listen with a keen ear. That said, I believe recent data can serve as a good indicator of what to expect in the upcoming fall real estate market. If you are willing to listen, you may just find this time of the year to be your favorite.

Analyzing The Upcoming Fall Real Estate Market

Fall real estate season

I want to make it abundantly clear: nobody will be able to predict the upcoming fall real state market without an inherent penchant for error; to assume otherwise would be a practice in ignorance. Regardless of what anyone tells you, predicting the market is a fool’s errand, but I digress. I am not here to tell you what will happen. I am here to tell you the most likely scenario we will be presented with come the latter part of this year.

Instead of looking into a crystal ball and crossing my fingers, I intend to present you with the facts — our most trusted barometer for what we can expect to happen. That said, what I am about to tell you is by no means guaranteed to happen, but rather the most likely outcome based on what we already know about today’s housing market trends.

Without further ado, here are a couple of the most important things real estate investors could see transpire as soon as this upcoming fall real estate market:

Inventory Will Remain Tight

Inventory levels, or lack thereof, continue to stifle what could have been an impressive recovery. If for nothing else, the housing market is in much better condition than we have seen in recent years. Equity has returned in droves and there is more demand for homes than we have seen in quite some time. That said, there is one key indicator that has yet to catch up: inventory. Inventory levels have prevented the housing market from making a triumphant return, and it looks like inventory issues will persist well into the fall real estate market.

Recent data presented by the National Association of Realtors (NAR) put inventory numbers at 4.2 months. More specifically, however, it would take just over four months for the current inventory of homes on the market to sell, given the pace homes are currently selling at. At the same time last year, inventory was slightly higher, as inventory sat right around the 4.5 month mark. It’s worth noting that a healthy, balanced market will typically exhibit somewhere in the neighborhood of six months; that means we are short by about a month and a half.

With that in mind, I wouldn’t expect inventory levels to ease as we enter what is typically known as a “slower” period for the housing market. It’s safe to assume fewer homes will be placed up for sale as the weather cools down, which certainly won’t help the current situation. As a result, investors need to be prepared to ramp up marketing efforts. With the understanding that there will be fewer homes to compete over, it stands to reason that those who are able to find more properties will have an easier time come fall and winter. So instead of slowing down during the colder months, as the housing market tends to do, I recommend staying ahead of the curve and ramping up marketing efforts. It’s the easiest way, as far as I am aware, to maintain lead flow in a market otherwise void of it.

Prices Will Continue To Increase

It’s a basic tenet of economics, but one that is worth remembering for the upcoming fall real estate market: the supply and demand of a product in question will influence its resulting price — it’s economics 101. The amount of a commodity, product, or service available and the desire of buyers for it, are considered as factors regulating its price, and houses are no exception to the rule. In fact, they may be the epitome of said rule. It stands to reason that the lack of inventory I discussed previously, in addition to today’s current demand, will drive prices up as we head into the fall real estate market.

In one year’s time, we have seen a direct correlation between the median sales price in the U.S. and the amount of available inventory. Over the course of twelve months (August 2016 to August 2017), we have seen available inventory drop by as much as 0.3 months and home prices increase 5.6 percent to $253,500. And since it doesn’t look as if inventory relief is anywhere on the horizon, it’s safe to assume prices will continue to march upwards. But don’t let higher home values fool you, demand doesn’t appear to be declining anytime soon. In addition to improved economic indicators, proposed policies could increase demand further.

“Trump administration policies are over emphasizing demand and under emphasizing supply,” says Ralph McLaughlin, chief economist at Trulia. “Policies that push up demand are only going to make price growth worse.”

Of particular importance are proposed changes to the standard tax deduction one typically receives for buying a home and, in an unexpected turn of events, overhauling the Dodd Frank Act, which could make it a lot easier for Millennials to receive loan approval.

Industry experts and pundits alike are of the consensus that prices will continue to increase in the fall real estate market. As a result, I would avoid waiting to find a home at the right price. Again, timing the market is a fool’s errand. Doing so at this time of the year could result in a higher price point. Instead, jump on those deals you already have in front of you with a price point that you are comfortable with. Chances are the same home will cost you more in October than it will today. Instead of waiting to see what the market does, act sooner rather than later. If you find a deal at a price you are comfortable with, it my be worth closing on immediately.

Usher In 2018 With Style

The fall real estate market is nearly upon us, and that means most real estate professionals will start to pack it in, or at least temper their expectations. However, there are still many opportunities to be had in the fall. While indicators may not sound encouraging at first, they aren’t there to tell you what to do, they are there to tell you what not to do; namely, don’t wait any longer. With prices and demand expected to increase and inventory to remain a burden, profits won’t be awarded to the timid. If for nothing else, waiting could actually end up costing you more than you had bargained for. Now, perhaps more than at any point this year, investors will want to act fast and decisively. There are deals out there, but they won’t sit around waiting for you to come to them; you have to be aggressive in your acquisition efforts.

Have you ever favored one part of the year over another when it comes to buying and selling real estate? Do you like the competitive nature of the summer, or the reserved demeanor of the winter? Perhaps even more importantly, have you had more luck buying or selling property at either time of the year? Let us know what your favorite time of the year is to invest in real estate in the comments below.