When Will the Current Real Estate Cycle Peak? Andrew Shader Explains

In real estate, some sellers are waiting for the current real estate cycle to peak before making a move. Is this the right choice? Andrew Shader takes a deep dive into this complex issue.

Fort Lauderdale, Florida, United States - September 10, 2022 —

There are good reasons to wait until the real estate market peaks to list properties for sale. However, identifying that peak can be complicated. Andrew Shader recently took the time to explain some of the nuances that go into this.

The first element to take into consideration is housing market premiums. This is the percentage over long-term pricing trends that buyers are paying in a particular real estate market to be able to purchase real estate. This number reflects how overvalued the housing market is in that area. As of June of this year, premiums had decreased in several markets, including San Francisco, Portland, Austin, Pittsburgh, Seattle, and Boise. Until then, only a few markets had experienced any declines.

These declines are meaningful because they indicate that the market is leveling off and prices are falling. According to Andrew Shader, this is a reliable sign that the next housing cycle will trend downward. It also gives real estate industry experts reason to believe that a peak has already occurred. 

There is additional evidence to support this thinking. Average home prices have declined in seven key markets: Stockton, Austin, Seattle, San Jose, San Diego, San Francisco, and Ogden.

Of course, there is never a complete consensus when it comes to predicting markets. Not every expert believes the housing market has peaked yet. Some believe that it’s best to wait a few more months before making that declaration. After all, residential real estate is still experiencing a significant inventory shortage. This could keep prices up, at least in the short term.

Shader cautions that when a housing slowdown does hit, it won’t look the same in every locale. Some regions will continue to have inventory issues as the population increases. This could be the case in Florida, where many areas are experiencing an influx of people moving in from other areas of the country. If this is the case, demand will keep housing premiums up. It will also create issues with access to affordable housing.

Conversely, areas with declining populations and excess inventories will see a much sharper decline in housing prices. This will work to the benefit of buyers who have been holding out.

Finally, it isn’t just buyers and sellers who are watching these market trends. The Federal Reserve is paying close attention as well. It recently boosted interest rates in an attempt to put the brakes on inflation and lower pricing gains. These recent changes may lead the Fed to take a more hands-off approach as the prices of homes begin to level off.

About Andrew Shader

Andrew Shader is a Florida-based real estate investor and entrepreneur. He credits his proactive approach for differentiating him from others in this field. Shader holds a bachelor’s in marketing and management from Florida State University. In his spare time, he enjoys spending time with friends and playing sports.

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