The real estate market can be defined as the interconnected system of market mechanisms that ensure the creation, transfer, management and financing of real estate. The real estate market represents a number of regional and local markets that differ significantly from each other in terms of price and risk level, also in terms of the efficiency of real estate investments, etc. Data on the real estate market in a given period are a critical indicator of the well-being of a country's economy.
The real estate market is an open market, easily accessible to anyone with enough liquidity to become the owner of a real estate property. It turns out to be very profitable for a large number of smart buyers who by learning how to take advantage of market fluctuations, have received the best possible return on their investment. Many real estate buyers use their intuition personal or random and unconfirmed indicators from official sources to predict the future rental values of accumulated assets as well as to find the right moment to buy or sell real estate. Undoubtedly in such cases mistakes are inevitable. For this reason, when an investor chooses to invest in real estate, analysis of the stage in which the development of the real estate market is located is extremely necessary. A basic knowledge of the real estate market will potentially increase the opportunity to make smart investments. which will enable the generation of planned profits.
Like any market, the development of the real estate market is cyclical, and goes through several stages. Although there is no sure way to predict its development, being aware of general market trends is important to make an investment. smart in the field of real estate. History has shown that the past and the present reveal much about the future.
The development stages of the real estate market can take decades or more. Sometimes they send false signals that the market will continue to expand or that bankruptcy is imminent. Unfortunately these signals become clear long after. The question arises that if it is so difficult to predict the stage in which the real estate market is, why should an ordinary investor delve into this topic? Information on this topic is needed by every investor in the market, to be able to provide themselves with some clarity of thought when the market becomes overly optimistic or pessimistic. If some parameters of real estate market development are carefully analyzed, every investor can have a basis to judge on the level of aggressiveness or protection he should show with his deals. Very often the euphoria of the crowd affects even the most sophisticated investors. The only way to minimize these effects is to understand exactly what is going on in the market. This provides a psychological distance from the world around.
A smart investor can use the analyzed data on the situation / stage in which the real estate market is located to adjust the investment strategy, or to better protect his financial interests in a transaction. However, it is impossible to say how long each phase lasts.
The real estate market goes through four stages, namely
Phase 1: Recovery;
Phase 2: Expansion;
Phase 3: Hyper Supply
Phase 4: Recession,
Phase 1 of the real estate cycle (RECOVERY);
Recovery is the rebirth of the real estate market cycle. This comes immediately after the recession phase (the end of the market) and marks the beginning of a new cycle. This phase is characterized by an upward trend of markets, which are essentially taking itself from recent economic upheavals. It finds many real estate markets, urban and suburban, suffering from inability to rent, reduced rents and selling prices, and in some cases from a large number of bankruptcies. This situation is a reflection of the economic situation. of a country. Unemployment at the moment nationwide is relatively high and demand has declined. Recovery starts at the lowest point in the market. When this phase begins, there is already an oversupply of the real estate market, due to the demand of previous phases for new construction and growth. However, the beginning of this phase occurs when new construction is stopped due to an oversupply situation. During the recovery, the demand for houses grows slowly, a demand which is offset by the existing supply and which somewhat reduces the surplus supply that exists in the market to lead to more balanced figures. The number of vacant properties is falling and rental prices are stabilizing.
In Albania this phase coincides with the period of 1998-2000. This is the period right after the review period that hit the country in 1997-1998. The years 1997 -1998 are the years of total crisis in Albania, where the inflation rate reached 42% . Bankruptcy of pyramid schemes plunged the economy into crisis, most of the population lost the money invested in them, directly affecting construction and reducing demand, the housing market underwent significant changes. In this period there was a decline The main reason for the decline in home sales was the political and economic collapse that the country was going through, mostly caused by the bankruptcy of pyramid schemes. Price levels changed, the amount of supply and demand in different directions. The devaluation of the domestic currency also led to a devaluation of the housing market.
As a result the period 1998-2000 found the real estate market oversupplied trying to strike balances. Construction levels in the years 1997 to 2000 are estimated to be the lowest in the 20-year history of real estate market development, in 1998 778 thousand square meters of new area were built, almost the same rates continued in 1999 with 620 thousand square meters. 
In our country, this stage of development turns out to be relatively short, a result of the special economic and political climate that characterizes a country in transition, however, the duration of this phase varies from case to case, from one market to another.
This is the most favorable period to invest in the real estate market for an investor who has liquidity. These investments will mature with the recovery of the economy and the transition to other stages of the real estate market cycle.
Phase 2 of the real estate cycle (EXPANSION)
This stage coincides with the best days for a country's economy. At this stage, the financial and real estate markets show signs of recovery. It is characterized by an increase in demand to use or own real estate, as well as a marked increase in rental rates nationwide. Real estate developers start buying and building new properties. The absorption of urban space is increasing, and overall commercial markets are constantly improving. Mortgage loans are gaining momentum.Real estate prices reach record values. Investors aim to meet their demand for assets located in areas with a developed infrastructure, targeting mainly the central areas of large cities with new construction. The development of the real estate market in the expansion phase is closely related not only to economic factors also with social factors, such as demographic movements from rural areas to urban areas and obviously also with political factors in the case of applying promotional or facilitation policies related to the implementation of construction in urban or rural areas. The phenomena of this stage of development of the real estate market vary from city to city, from state to state and the characteristic sub-markets of each country, but in general this is a period of development.
In Albania, this phase coincides with the period after 2000 until 2007. After the severe crisis of 1997, Albania has experienced high rates of economic growth. In 2000, it turns out that the funds invested in the construction sector have increased by 89, 1% compared to 1997. This boom was accompanied by also very optimistic hopes for the future of real estate prices, which brought a credit boom in Albania, which peaked in 2005, with an increase of 74% or in the amount of ALL 51.9 billion. This period also coincides with the increase in the level of remittances or remittances. Remittances have increased by 32% in 2004 compared to a year ago, in 2006 remittances reached a maximum value of ALL 1370 million. 
The Enlargement phase is generally characterized by a slow development. However, rates are starting to rise faster, thus creating a real estate bubble. When supply reaches the same level as demand within the market, thus creating a balance between them, the expansion phase ends.
Phase 3 of the real estate cycle (HYPER SUPPLY)
After the Equilibrium phase new constructions usually continue as the entities operating in the market do not realize that equilibrium has been reached. This is the period in the cycle when markets experience a boom, and are overheated. After the second phase where the demand was high and the market aimed to meet it through the generation of new assets, in this phase, the real estate market is saturated in relation to the real demand in the market for real estate. This leads to a reduction in the rental price of flats and falling house prices, while non-tradable properties are on the rise. Housing rates are starting to fall. Eventually, market operators begin to realize that they are in a hyper-supply situation and new construction rates begin to slow down. The outcome of this reaction depends on many factors. For example, if the decline in new construction rates occurs quickly after the equilibrium point is reached, the market may return to a previous stage. It is also possible for the market to remain in the Hyper-Supply phase for a long period of time.
Albania is currently in a phase of hyper-supply but relatively controlled. In 2007, the first signs of the economic crisis appeared in Albania and the level of remittances began to decline. House prices continued to rise until 2007, when a slowdown in the construction sector was observed for the first time, also during this year there was a decrease of 13.7% in sales volume. The annual downward trend of new construction signaled that the market was facing a slowdown in demand for real estate, which led to a slight decline in prices.
The slowdown in the growth of the index is related to the easing of demand for housing, as well as the increase in supply for them during 2008, new areas built during this year were 2.8 million square meters, thus increased by 125% compared with the year 2007. In recent years, the real estate market in Albania has remained at this stage, and it is still uncertain whether it will be able to return to an earlier stage or move towards the last stage of this market cycle.
Phase 4 of the Real Estate Cycle (RECESSION)
This is the most problematic stage of the real estate market development. A large number of properties are appropriated by banks due to non-payment of financial obligations, corporate bankruptcies negatively affect the real estate market, lease contracts are terminated, and many real estates remain vacant for a long time. House prices are falling as offers for sale rise. Rental value reductions are common and landlords often offer deals. The recession phase is a good time for opportunistic investors. They can picket a property in distress, buy it at a bargain price, invest in improving it, and wait for the next stage of the real estate market cycle to expand to put it back on the market.
The most recent and clear example of this phase is the recession faced by the US in 2008. The financial crisis of 2008 gave the biggest shock to the US real estate market since the Great Depression. This situation originated, among other things, in the policies pursued in the early 2000s to ease lending standards, which were pursued due to competitive pressure between banks to capture as much of the mortgage market as possible. Government policies also aimed to increase the number of homeowners by providing much more procedural facilities to potential buyers, policies which of course facilitated the possibility of buying a home by buyers who did not have sufficient funds for large payments. This led to a collective euphoria towards home purchases, and created a number of investors who aimed to buy real estate in order to resell them judging optimistically by the growing demand for real estate. This situation was described by Robert Shiller, Professor of Economics at Yale University, who in his work predicted the impending crisis as "an unreasonable Abundance situation". In retrospect it is noticed that new constructions were increasing the supply rates in the market beyond the demand. Meanwhile, financial institutions began to face problems in collecting loans. These were some of the main causes that led to the 2008 recession in the US.
Mortgage loans became somewhat more difficult to secure by financial institutions in difficulty, despite the borrower's credit history, which eased the demand for housing. This led to a drop in price levels, while the number of unsold homes expanded dramatically and builders abandoned emerging projects. The 2018 real estate market recession in the US is the clearest example of the last phase of the real estate market cycle.
But markets are finally emerging from this stage, and the overall economic scenario shows signs of recovery. The cycle repeats itself, at the request of rising tenants, rising rents and property prices, which goes step by step with the nationwide economy.
What is important in this cycle for a skilled investor is to know when to enter the market as well as when to leave it. Also, every investor who chooses to invest in real estate should learn not to panic based on market trends, which can lead to hasty decisions such as selling a property at a low price at the moment when the market is declining with the idea of avoiding the risk of further declines.A smart buyer should take care to find the right moment to enter the market.
It should be borne in mind that the indicators of each of the stages of development of the real estate market should be only partially determinant and influential in the decision-making of investors. It is not advisable to proceed with the purchase of a property just because the market is overheated and it is thought that the opportunity should not be missed. Buying a property requires a broader and more careful analysis to make this important financial decision. It is not advisable to withdraw liquid from savings to buy any real estate because interest rates are low. And if interest rates are high, it does not mean to influence as a key factor in decision-making to cede an investment that would have economic benefits in the future.
Macroeconomic indicators are useful to get a general idea. But in order for an investor to be successful in the real estate market, it must be clear what his financial goals are and what makes a deal possible. valuable for the realization of these goals. It is also necessary to conduct a study of what is happening in the specific area where it is intended to invest, and how an offer can be made appropriate to the situation in which the real estate market is at the moment, aiming to minimize financial losses from an offer all .These are all factors that need to be carefully evaluated to make a profitable investment in the real estate market.
The Rise and fall of US housing market. Past, Present and Future - Junior Achievement U.S.A.
Dissertation. Development and Problems of the Real Estate Market in Albania - Luciana Koprecenka (Kabella)
Bussines and Real Estate Cycles - Siti Almafahaza Hussein
 Statistics of the Bank of Albania
 Statistics of the Bank of Albania