Are we in buyers' market phase I or sellers market phase II?

[Stephen Kunen]

Have been reading David Lindahl's book on Emerging Markets, and wondering if we are in Seller's Market Phase 2 or Buyer's Market Phase 1.

Buyer’s Market Phase 1: A market that is oversupplied with properties

Buyer’s Market Phase 2: The market starts to absorb the oversupply, vacant units become occupied and abandoned properties get purchased.

Seller’s Market Phase 1: Demand has reached it’s highest point. There are plenty of investors that want to buy what you are selling.

Seller’s Market Phase 2: Job growth slows, properties take longer to sell, and the market is slowly getting oversupplied by new developments.

I understand that it's market specific. It's just the market I am in is showing signs of both. On the one hand, the properties have been on market for longer, and the prices are much higher than years ago (2012/2013), which are signs of Seller's Market Phase 2. However, the city also has and will be continuing the revitalization plan, which does not indicate slow job growth. Seller's Market Phase 2, according to David, is the most risky phase to invest. So I am just wondering what's the best strategy to invest now. I am also looking at a property that is "luxury" in nature (relatively speaking - not Manhattan luxury, just the rents are $1,100 to $1,500) , and wonder if that's a bad move if the economy turns.

[Ed Emmons]

Luxury areas take the biggest hit when markets drop. I would make sure you are buying where you still have equity and positive cash flow. A little cushion would be advisable. You may also be very neighborhood specific. If you are at the high end of your area, you need something that will provide stability like a nearby hospital to supply high paying tenants.