Everyone knows that real estate goes through cycles. That’s no surprise. But did you know that buying real estate in the winter can be a great way to improve your returns? Real estate prices follow two general pricing cycles: the multi-year market cycle and an annual pricing cycle. Prices go up in the summer when buyers are more active and families are moving between school years. In the winter, prices go down as the weather gets cold and families stay put.
As this article from Business Insider’s Tanza Loudenback shows, prices are more than 6% lower in the winter. This can increase investment returns by more than 30% in some markets. The article provides a list of 26 markets where investment returns increase the most during winter months. Five of the top ten markets are in cold weather markets, with Chicago and Cincinnati coming in tied at number four.
Although the analysis focuses on single family rental homes, the concept should apply to multi-family properties as well. Because winter sees the least amount of renter activity, there is a natural dip in occupancy and rental rates. This can work to the advantage of buyers in the winter months as lower property fundamentals get priced into the financials. So, if you're considering an investment in real estate, take advantage of the cold weather.
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