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Could An Unexpected Summer Price Lull Be the Investor’s Opportunity?

Sheila Seclearr's picture
Summer House

The unsuspected summer price lull may been a surprise for real estate investors, but could this be the opportunity to invest in the housing market or no.

Let’s consider more resources to support the many factors we weigh to make real estate investment decisions. When you check out the website for The National Association of Realtors, you’ll find a wealth of statistical resources. According to the NAR’s July 2014 Report, which you can download on their site, there’s been an increase in listings this year because of the home price recovery, but other factors have kept inventories below the level of the demand.

The overall direction of the market continues to be optimistic for the coming year, but supply shortages, flat wages and tight credit conditions are blamed for a summer lull that was unexpected.

The report cites three consecutive months of price gains in pending home sales, but even that was not enough to stave off a 1.1 percent drop. Lawrence Yun, chief economist for the NAR who compiled the report says, “The sector is stabilizing, but still facing several obstacles that are preventing sales from reaching their full potential.”

That means the investor may find this the perfect opportunity to take advantage of a lull before prices increase to their predicted levels. Certainly check your local statistics but don’t wait for prices to drop or rates to change. Analysts are saying each will increase in the near future.

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Your local market may vary in either direction from the overall national trends that NAR presents. Consider also that buying investment property is different from buying a home where you and your family will live. You might find a great investment near a college or hospital that’s in an area where you personally wouldn’t want to live. So business decisions weigh differently and you’ll figure out what’s right for you.

When Robert Schiller, Sterling Professor of Economics from Yale University, appeared on CNBC’s “Squawk on the Street” in late July, he suggested the summer dip in home sales was affected by geopolitical unease. "It seems like optimism about housing is weakening," he said. "Maybe the internationals, maybe all this talk about Ukraine has people rattled. You know, I've felt that in the past, that international news affects the housing market.”

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Last week’s Dow Jones dip was also blamed on geopolitical tension and the five-month crisis in Ukraine, according to Art Cashin, a forty year veteran of Wall Street and the UBS Director of Floor Operations. With the stock market’s drop, there are even more reasons to look at real estate. Weigh in here with your comments and any thoughts on your local market.

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