During the past eight to ten years, property markets in most English speaking countries have formed a similar pattern. The Boston real estate market followed these trends closely.
During the first few years of the decade the market experienced a prolonged period of increasing price levels. Prices in fact went up so fast that many analysts soon referred to the situation as a property bubble.
The ever increasing price of an ordinary family home of course resulted in continually increasing bond repayments for the man in the street. It was no different in Boston and soon the average Boston home owner was barely able to afford the monthly repayments on a house of his own.
We are all familiar with how the story went from there. Home owners started to default on their mortgage bond repayments. The banks started to repossess these homes and sell them at auctions. This created a situation where the market was flooded by too much inventory, which in turn led to sellers being forced to drop their asking prices. Soon a downward price spiral started.
Does this mean that now is a bad time to invest in a home in the Boston area? Two years ago the answer would no doubt have been yes. At that time businesses and prices were still dropping in real terms and it would have taken a relatively long time before you could recover your investment.
At the present moment it seems as if the market has stabilized. Prices no longer drop at an alarming rate and if we listen to the economists, it would seem that the worst is over.
When it comes to investing in the property market, the same principles count as when you are investing in the stock market. The mistake made by many novices in the marketplace is to buy high and sell low. They buy when prices are at their highest, then cling to the investment only to sell when prices hit bottom.
That is not the way to go about a long term investment, whether it’s in stocks or in real estate. You should ‘buy low and sell high’. Taking into account this little bit of advice, now is very likely a good time to start looking seriously at investing in real estate again.
Right now many experts predict that the property market in Boston is very close to its turning point. Once this happens, prices will initially rise very slowly. With increasing demand, the level of price increases will speed up and things will only start to slow down again once the market gets close to its top turning point. From an investor’s perspective, now is therefore a good time to start investing in Boston real estate again. If you wait to buy until the market is close to the top of the price cycle, it will take many years to make a profit.
A savvy investor doesn’t consider a property investment as a way to make quick money. He knows that it normally takes five to ten years before you show a good profit. An investment in the Boston real estate market is guided by the same principles. Buy now, when prices are rock bottom. Sell five to ten years from now when you are bound to make a substantial profit
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