Should real estate investors and real estate agents be switching their strategies as the seasons change?
If so, what are the best practices for maintaining income and momentum when seasonal shifts impact deal and cash flow?
One of the factors that frequently separates the most successful real estate pros from those that stumble, is the impact of the seasons on real estate. Ultimately, the cyclical changes in the seasons will dramatically impact the way you invest. Understanding each season, in regards to strategy, will help your bottom line.
Many may be aware of the special days throughout the year that can derail or boost real estate marketing efforts. Some are also aware of how in the stock market the biggest gains and activity is limited to a certain part of the year. Seasons accommodate such different markets that some financial advisers say investors can take a significant time off in down seasons. However, many fail to anticipate how the seasons and, in particular, this time of year impacts real estate.
There may be some middle American markets that don’t feel the pinch as much as others. However, those in the North can experience a dramatic dip in activity during the colder months. Subsequently, the South and Southwest can experience major upticks in business as the ‘snow birds’ flock in until the freeze thaws.
For northern markets, a population void compounded by severe weather can result in a serious decreases in deal flow and income. Fewer buyers and renters can lead to reduced asking prices for homes and rents. This can increase motivation and urgency among property owners. It can be very advantageous for savvy investors and agents which recognize this as a temporary, seasonal issue. Those who prepare accordingly can increase their market share while others pull back or push in to pick up more deals with better spreads.
Conversely, sunnier parts of the country can see a huge surge in population and renter/buyer activity between the beginnings of November through the end of April. This can be seen in areas from South Florida all the way across the county to San Diego County, California.
In these fall/winter hot spots, real estate agents enjoy a massive pickup in activity. Rental property owners can often name their prices and reap rents at three times the monthly rate. Those flipping houses can bump up prices and turn homes quickly for top dollar.
Obviously, this situation can be reversed for many communities during the other half of the year. Some sunny Florida cities are effectively ghost towns during the summer. This is a time when there are few consumers and many stores shut down until season comes back.
This can all be a major issue for those that aren’t familiar with these cycles and are trying to maintain a steady income. So what are the available solutions?
One obvious option is to migrate with the snow birds and pickup business wherever they are at. For example, if you are a Michigan real estate agent you might head to Southwest Fla. to do business for a few months. If you are a New York or Canadian real estate broker, you’d probably head to Fort Lauderdale or Miami.
If you aren’t up for the dual life, or it just isn’t practical due to having kids in school, it could be possible to diversify with another branch. Enjoy virtual wholesaling, or simply cash in on referrals from wherever you are at.
Finally, note that it is okay to take some down time as well. Use the slower months to relax, recoup, re-energize and plan ahead for the hectic season.
